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Why the U.S.-China duo is the most significant, and perilous, bilateral relationship in history

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The U.S. and China represent the most significant – and potentially most perilous – bilateral relationship in human history.  Given that reality, neither side is managing their rising tensions with adequate skill or durable strategy.

That’s the way Stephen Heintz of the Rockefeller Brothers Fund put it in a conversation with me a couple of days ago. It is also the subtext of conversations I’ve had with world leaders visiting Washington, D.C. this week for the IMF and World Bank meetings.

U.S.-Soviet relations defined the Cold War, with both sides fielding the unprecedented nuclear capability to devastate each other, and much more. Before that, the Anglo-American relationship was decisive, from intense U.S.-British competition in the 19th century to an alliance that prevented fascist victory during World War II in the 20th century.

Yet Heintz’s argument is compelling that U.S.-Chinese relations have a historically unique significance, based on their multi-dimensional nature that touches on just about every aspect of global affairs now and into the foreseeable future.  

That’s true whether you’re concerned about world war, the global economy, climate change, human rights, the contest between democracy and authoritarianism, the future of space, or the accelerating race for technology’s commanding heights.  Never has so much across the world rested so heavily on two countries’ ability to manage their relationship across a dizzying array of domains.

The accuracy of data related to China’s economy, which for many years has been the biggest driver of global growth, took center stage at this week’s IMF and World Bank meetings. The controversy focused on allegations that IMF Managing Director Kristalina Georgieva asked colleagues, when she was a top official at the World Bank, to find a way to boost China’s standing in its flagship 2018 Doing Business report.

Georgieva has denied any wrongdoing. The IMF board, which convened eight times to consider her fate, concluded that its review of the allegations “did not conclusively demonstrate that the managing director played an improper role.” The board reaffirmed its confidence in Georgieva’s leadership, but the controversy is likely to continue.

The subtext is that any international institution leader must manage the reality that China will increasingly act to influence, lead or replace the world’s most significant multilateral bodies, in this case, the world’s lender of last resort. 

Meanwhile, senior government officials in D.C. this week, representing the world’s most important economies, had plenty else to worry about: an unfolding energy crisis, rising inflation, slowing growth, and increasing climate concerns ahead of the 2021 United Nations Climate Change Conference, or COP26, that begins Oct. 31 in Glasgow, Scotland.

A senior official from one of the most significant U.S. allies, speaking anonymously, said all of this has been made more difficult to manage due to the growing volatility in U.S.-Chinese relations, generated by both their differences and their domestic realities.

China is lurching in a more authoritarian direction at home and toward more confrontational policies abroad as it flexes its regional and global muscles. Amid messy and polarizing U.S. politics, following a badly executed Afghan withdrawal, and lacking clarity about U.S. strategy toward Beijing, partners wonder about U.S. commitment, competence and capability for global common cause.

The senior allied official said his country’s greatest medium-term and longer-term economic risk was that rising tensions between the U.S. and China boil over into a contest that engulfs his country. “Few of us can afford to make a decision between the U.S. and China,” he said. “So please don’t ask us to do so.”

It isn’t that America’s allies are naïve about the unfortunate course President Xi Jinping is setting for his country. It’s just that a great many of them have China as their number one trading partner – including the European Union as a whole, Germany, Japan, South Korea, Saudi Arabia, and the United Arab Emirates. China represented nearly 30% of global growth between 2013 and 2018, double that of the U.S.  

Much of the most recent analysis regarding China has circled around two immediate issues: growing signs of China’s economic fragility, after decades of double-digit growth, and increased saber-rattling and threats concerning Taiwan, 

The two could be connected.

A growing chorus of analysts argues it could be Chinese weaknesses rather than its strengths that pose the greatest dangers. The logic goes that President Xi, if his economic difficulties grow, might choose to stoke up nationalism through escalating confrontations with the United States with Taiwan as the most tempting target. The most immediate source of economic concern, aside from new power shortages, has been the unraveling of Chinese property giant Evergrande amid missed bond payments and under the weight of $300 billion in loans.  

 “If China’s policymakers can successfully pivot their economy to be a more productive and dynamic one, the risk to Washington is real,” writes a new Atlantic Council fellow Michael Schuman. “If, however, it turns out that China is more like Evergrande – a glossy growth story with a rotten core – then Beijing’s ambitions will unravel, much like the property company’s.”

Bonny Lin and David Sacks argue this week in Foreign Affairs that “China’s increasingly aggressive behavior” toward Taiwan “makes a cross-strait emergency more likely. But the risk of a crisis stems less from the possibility of an immediate Chinese invasion than from an accident or a miscalculation that turns deadly – a midair collision between Chinese and Taiwanese jets.”

This all has the feel of the perilous beginning of an uncertain era that lacks established rules or patterns of behavior. The U.S. is unaccustomed to such challenges to its role, and China is unpracticed at managing global tensions.

It’s worth remembering that the U.S.-Soviet relationship was probably most dangerous from 1945-1962. In those 17 years after World War II, the two sides navigated a series of crises, culminating in the 1962 Cuban missile crisis, before the relationship evolved into more predictable contours.       

Two top Biden administration officials, National Security Advisor Jake Sullivan and top Asia coordinator Kurt Campbell, impressively laid out their thinking in 2019 in Foreign Affairs on how to navigate U.S.-Chinese relations.

That was before they knew they would own the challenge inside the White House. They now are working toward a virtual U.S.-Chinese summit before the year’s end, and the two sides have made progress toward working-level talks on several key issues.

Under the headline Competition without Catastrophe, Sullivan and Campbell wrote in 2019, “The starting point for the right U.S. approach must be humility about the capacity of decisions made in Washington to determine the direction of long-term developments in Beijing … (the U.S.) should seek to achieve not a definitive end state akin to the Cold War’s ultimate conclusion but a steady state of clear-eyed coexistence on terms favorable to U.S. interests and values.”

Whether they succeed will shape the global future.

 

 

 

 

 

 

 

          

         

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Boeing, travel stocks surge as investors shrug off omicron concerns

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An American Airlines passenger jet approaches to land at LAX during the outbreak of the coronavirus disease (COVID-19) in Los Angeles, California, April 7, 2021.

Mike Blake | Reuters

Boeing, airlines and other travel stocks surged on Monday after health experts shared early signs that the omicron variant of Covid may be causing milder symptoms than previous strains.

The travel sector was hard-hit by the emergence of omicron variant, which Botswana and South Africa first reported late last month. Cases were quickly detected in countries around the world, sparking renewed travel restrictions and outright bans, shortly after rules for international trips were loosened.

Dr. Anthony Fauci, the White House’s chief medical advisor told CNN on Sunday that “although it’s too early to make any definitive statements about it, thus far it does not look like there’s a great degree of severity to it.” A report from the South African Medical Research Council, released Saturday, suggested that the strain could cause a milder infection.

Shares of Boeing were up more than 3% in afternoon trading on Monday, while American Airlines and United Airlines were each up more than 10%, among the highest gainers in the S&P 500, topped by Norwegian Cruise Line and Royal Caribbean were up 12% and 11%, respectively. Online travel agency Expedia was trading more tan 8% higher.

Officials from the World Health Organization on Friday, however, warned against reading too much into data gleaned from the original cases in South Africa, saying it’s still too early to understand the severity of disease caused by omicron. Early reports of mild symptoms in some of the first cases where it was identified were based on a cluster of university students who tend to be younger and experience more mild symptoms than older adults, she said. Americans and Europeans also tend to be older and less healthy than the general population in South Africa, they noted.

“There was initial reports that it tended to be more mild, but it’s really too soon,” Maria Van Kerkhove, WHO’s technical lead on Covid-19, said in a Q&A streamed on the group’s social media channels. “Everybody who is infected with SARS-CoV-2 regardless of what variant will always start out with a mild disease. And so maybe it will stop there with mild, some people are asymptomatic of course, but it may stop with mild disease or it may take some time.”

Air travel jumped over the Thanksgiving holiday week, handing airlines some of their busiest days since the pandemic began, though still shy of 2019 levels. Omicron sent shares spiraling on concerns about a slump in demand.

Large network carriers are particularly dependent on longer-haul international trips, which have been slower to return in the pandemic compared with U.S. domestic travel.

-CNBC’s Holly Ellyatt contributed to this report.

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Biden to warn Putin against Russian invasion of Ukraine

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This combination of pictures created on December 06, 2021 shows US President Joe Biden during a signing ceremony at the White House in Washington, DC on November 18, 2021 and Russian President Vladimir Putin in a congress of the United Russia party in Moscow, on December 4, 2021.

Getty Images

WASHINGTON – President Joe Biden will warn Russian leader Vladimir Putin that the U.S. is prepared to impose severe economic countermeasures if Moscow carries out an attack on Ukraine, a senior administration official told reporters Monday.

The video call, which is set for Tuesday, will happen against a backdrop of amped-up tensions triggered in part by an alarming deployment of Russian troops and defense equipment along the country’s border with Ukraine.

“These movements are consistent with the planning that we see underway for a military escalation in Ukraine,” said the official, who declined to be named in order to discuss details of the upcoming call between Biden and Putin.

“We have had intensive discussions with our European partners about what we would do collectively in the event of a major Russian military escalation in Ukraine,” the official said. “We believe that we have a path forward that would involve substantial economic countermeasures by both Europe and the United States that would impose significant and severe economic harm on the Russian economy, should they choose to proceed.”

The administration official declined to say whether the U.S. would take direct military action against Russia if there were an invasion.

In recent weeks, Ukraine has warned Washington and European allies that Russian troops have amassed along its eastern border, a development that mimics Moscow’s 2014 invasion of Crimea. The annexation of Crimea sparked international uproar and triggered a series of sanctions on Moscow. Shortly after the invasion, a war broke out in eastern Ukraine between government forces and Russian-backed separatists.

An unclassified U.S. intelligence document obtained by Reuters shows Russian military activity on the territory of Russia and Russian-annexed Crimea close to the border with Ukraine.

Reuters

“To be clear, we do not know whether President Putin has made a decision about further military escalation in Ukraine. But we do know that he is putting in place the capacity to engage in such escalation should he decide to do so,” the senior Biden administration official said.

“We’ve seen this Russian playbook before in 2014, when Russia last invaded Ukraine,” the official added.

Meanwhile, the Kremlin has dismissed suggestions that Moscow was preparing for an attack on Ukraine and defended its right to deploy troops on its own territory.

Ukraine has previously pointed to Russian aggression as justification to accelerate its membership bid to join the North Atlantic Treaty Organization, the world’s most powerful military alliance. Ukraine announced in 2002 that it would seek to join NATO. Moscow has called Ukraine’s ambition to join the alliance a “red line.”

Earlier on Monday, Kremlin spokesperson Dmitry Peskov described the state of U.S. and Russian relations as “lamentable” and reiterated Moscow’s opposition to NATO’s expansion.

“The tense situation around Ukraine and NATO close-up to our borders will be discussed. And President Putin’s initiative on long-term guarantees of Russia’s security. All of these topics will be discussed,” Peskov said at a news conference previewing the call.

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“Of course, the bilateral relations will be discussed which are still in a lamentable state,” he added.

Last week, NATO Secretary General Jens Stoltenberg called on Moscow to deescalate tensions and reiterated that the alliance’s commitment to Ukraine’s sovereignty and territorial integrity “remains unwavering.”

“Ukraine is a sovereign, independent nation. And every sovereign, independent nation has the right to choose its own path, including what kind of security arrangements it wants to be part of. So it is up to Ukraine and 30 allies to decide when Ukraine is ready to join the alliance,” Stoltenberg said during a NATO meeting in Riga, Latvia.

“[Russia] has no veto, no right to interfere in that process,” Stoltenberg said.

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Hedge fund pioneer Michael Steinhardt surrenders stolen antiquities, Vance says

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Michael Steinhardt

Scott Eells | Bloomberg | Getty Images

Hedge fund pioneer and philanthropist Michael Steinhardt has surrendered 180 stolen antiquities valued at $70 million and has been banned for life from acquiring antiquities, Manhattan District Attorney Cyrus Vance Jr. said Monday.

The surrender of the items comes after a probe that began in 2017 into the billionaire Steinhardt’s “criminal conduct,” the DA’s office said in a statement. The agreement ends a grand jury probe of Steinhardt, meaning he will not be criminally charged in the case, according to DA’s office.

“The seized pieces were looted and illegally smuggled out of 11 countries, trafficked by 12 criminal smuggling networks, and lacked verifiable provenance prior to appearing on the international art market, according to the Statement of Facts summarizing the investigation,” the office said.

Vance said that the agreement with Steinhardt, 80, will return the stolen items to their rightful owners in those countries, instead of being held as evidence “to complete the grand jury indictment, trial, potential conviction and sentence.”

The agreement comes three years after Steinhardt’s office and home were raided by investigators as part of Vance’s probe. The DA said Steinhardt’s agreement to accept a lifetime ban from acquiring antiquities was “unprecedented.”

“Even though Steinhardt’s decades-long indifference to the rights of peoples to their own sacred treasures is appalling, the interests of justice prior to indictment and trial favor a resolution that ensures that a substantial portion of the damage to world cultural heritage will be undone, once and for all,” Vance said.

Steinhardt founded his company Steinhardt Partners LLP in 1967. He closed the hedge fund in 1995. Steinhardt also served 15 years as chairman of the board of Wisdom Tree Investments before retiring in 2019.

Steinhardt’s lawyers, Andrew Levander and Theodore Wells Jr., in a statement, said, “Mr. Steinhardt is pleased that the District Attorney’s years-long investigation has concluded without any charges, and that items wrongfully taken by others will be returned to their native countries.”

“Many of the dealers from whom Mr. Steinhardt bought these items made specific representations as to the dealers’ lawful title to the items, and to their alleged provenance,” the lawyer said. “To the extent these representations were false, Mr. Steinhardt has reserved his rights to seek recompense from the dealers involved.”

The DA’s office said that the probe began when investigators looked into the statue of a Lebanese bull’s head, which was stolen during the Lebanese Civil War.

That investigation determined Steinhardt had bought that multi-million-dollar statue and later loaned it to the Metropolitan Museum of Art in New York City, the office said. That statue was seized, as was a second marble statue of a calf bearer, which also was from Lebanon, and which had also been bought by Steinhardt for millions of dollars.

“In the process of uncovering the Lebanese statues, the D.A.’s Office learned that Steinhardt possessed additional looted antiquities at his apartment and office, and, soon after, initiated a grand jury criminal investigation into his acquisition, possession, and sale of more than 1,000 antiquities since at least 1987, the office said.

“As part of this inquiry into criminal conduct by Steinhardt, the D.A.’s Office executed 17 judicially-ordered search warrants and conducted joint investigations with law-enforcement authorities in 11 countries: Bulgaria, Egypt, Greece, Iraq, Israel, Italy, Jordan, Lebanon, Libya, Syria, and Turkey.

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Vance said in a statement, “For decades, Michael Steinhardt displayed a rapacious appetite for plundered artifacts without concern for the legality of his actions, the legitimacy of the pieces he bought and sold, or the grievous cultural damage he wrought across the globe,”

“His pursuit of ‘new’ additions to showcase and sell knew no geographic or moral boundaries, as reflected in the sprawling underworld of antiquities traffickers, crime bosses, money launderers, and tomb raiders he relied upon to expand his collection,” Vance said.

In 2019, The New York Times reported that six women had accused Steinhardt of sexual harassment. He denied the allegations.

The Times report, which also cited a lawsuit filed by another woman, said he had made sexual requests when the women sought support from the philanthropist. The Times also reported that Steinhardt appeared in two sexual harassment lawsuits, but was not named as a defendant in either case.

The Steinhardt Foundation for Jewish Life called the Times report “intentionally defamatory.”

But in a statement, the foundation also said Steinhardt’s “sense of humor can be insensitive, and he has apologized for the unintended bad feelings his remarks have caused.” The website includes a statement from the billionaire, who denies ever trying to touch anyone inappropriately. 

Vance’s office detailed a number of the items surrendered by Steinhardt.

They include:

  • The Stag’s Head Rhyton, depicting a finely wrought stag’s head in the form of a ceremonial vessel for libations, purchased from The Merrin Gallery for $2.6 million in November 1991. The item, which dates to 400 B.C.E., first appeared without provenance on the international art market after rampant looting in Milas, Turkey. In March 1993, Steinhardt loaned the Stag’s Head Rhyton to the Met, where it remained until the D.A.’s Office applied for and received a warrant to seize it. Today, the Stag’s Head Rhyton is valued at $3.5 million.     
  • The Larnax, a small chest for human remains from Greek Island of Crete that dates between 1400-1200 B.C.E., purchased from known antiquities trafficker Eugene Alexandervia Seychelles-headquartered FAM Services for $575,000 in October 2016. Alexander instructed Steinhard to pay FAM Services via Satabank, a Malta-based financial institution later suspended for money laundering. While complaining about a subpoena requesting provenance documentation for a different stolen antiquity, Steinhardt pointed to the Larnax and said to an investigator with A.T.U.: “You see this piece? There’s no provenance for it. If I see a piece and I like it, then I buy it.” Today, the Larnax is valued at $1 million.     
  • The Ercolano Fresco purchased from convicted antiquities trafficker Robert Hechtand and his antiquities restorer Harry Burki with no prior provenance for $650,000 in November 1995. Depicting an infant Hercules strangling a snake sent by Hera to slay him, the Ercolano Fresco dates to 50 C.E. and was looted in 1995 from a Roman villa in the ruins of Herculaneum, located near modern Naples in the shadow of Mount Vesuvius. It first appeared on the international art market on November 10, 1995 when Hecht’s business partner wrote Steinhardt regarding a “crate being delivered to you soon” with the artifact inside. Today, the Ercolano Fresco is valued at $1 million.
  • The Gold Bowl looted from Nimrud, Iraq, and purchased from Svatoslav Konkin with no prior provenance for $150,000 in July 2020. Beginning in 2015, objects from Nimrud were trafficked when the Islamic State in Iraq and the Levant (ISIL) targeted cultural heritage from Nimrud, Hatra, and Khorsabad, particularly ancient objects made of gold or precious metal. The Gold Bowl, which is crafted from gold with a scalloped flower design, first surfaced on the international art market in October 2019, when a Customs and Border Patrol officer notified the D.A.’s Office that Konkin was on a flight from Hong Kong to Newark, New Jersey, hand-carrying the Gold Bowl for Steinhardt. Today, the Gold Bowl is valued at $200,000.     
  • Three Death Masks purchased from known antiquities trafficker GIL CHAYA with no provenance whatsoever for $400,000 in October 2007, less than a year after they surfaced on the international art market. The Death Masks (circa 6000 to 7000 B.C.E.) were crafted from stone and originated in the foothills of the Judean mountains, most likely in the Shephelah in Israel.  They appear soil-encrusted and covered in dirt in photographs recovered by Israeli law-enforcement authorities. Today, the Death Masks are valued at $650,000. 

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