January 23rd-29th: Tension continues at the Ukraine Russia border continues, Italian presidential election, US Federal Reserve and Chip Supply
Welcome Back to the Second Newsletter
Hello Everyone, welcome back to Global Community. Given that this week the dominant issue is the tensions surrounding Russia, The West and Ukraine that will be to none of your surprise the story of the week (sorry for the spoiler), I will focus more on that story than the others but, I’ll still try my best to cover what’s going on in the rest of the world.
#5: Truckers Convoy heading to Ottawa to protest against Cross-Border Vaccine Mandates
Starting here at home, A convoy of truckers will be in Ottawa this weekend protesting against the cross border vaccine mandate that is being introduced by the Trudeau government. This vaccine mandate would make sure that Truck Drivers that are from or heading to the US would have to be vaccinated to enter or face a 14 day quarantine period. Some in the manufacturing industry as well as in the business community criticize the vaccine mandate as they think it will exacerbate the supply chain issue. However, there has been an easing of the supply chain as CEO of Metro groceries Eric La Fleche says that vaccine mandates have boosted the price of goods but have not caused the scenes of empty aisles. This point was reiterated by the Retail Council of Canada, a industry group representing the big box grocery stores in Canada as they have seen minimal impact for bringing merchandise to Canada from the US. Also one of the reasons that have also been cited for supply chain disruptions in Canada is due to the damage that the BC port has taken during the floods last year. The protest have been getting headlines also for its connection to some fringe groups that are wanting to take advantage of the convoy as the Canadian Anti Hate Network have found that some of the people associated with the protest have expressed online that the protest at Ottawa will be “Canada’s January 6th” and also have encourage the hanging of politicians. The rhetoric from politicians have also been heated at times with former Conservative leader Andrew Scheer called Prime Minister Trudeau, “biggest threat to freedom in Canada,” and the People’s Party of Canada leader Maxime Bernier said the covid measures were “fascist” and “authoritarian”. The Prime Minister has called the convoy a “fringe minority” that hold “unacceptable views”. The view was reiterated by NDP leader Jagmeet Singh, who has been answering questions over his brother in law’s $13,000 donation to the convoy’s GoFundMe. Condemnation against the truckers convoy has also came from the Canadian Trucking Alliance who have said 85% of drivers are fully vaccinated. The Atlantic Trucking Alliance have urged their truckers not to participate in the protest.
While were on the topic can we also not harrass and send death threats to journalist doing their jobs. If you are doing that cancel your subscription to my newsletter you lowlife.
#4: Federal Reserve Interest Rate Hikes
If there is an indicator of what is going to happen to inflation I suggest watching the decision that the US Federal Reserve will make on interest rates. Jerome Powell, chair of the Federal Reserve has signaled that Interest rate hikes are coming “soon” which will likely happen in March when the Federal Reserve has there next meeting. This would be the first time the Interest Rate is raised since three years. The main reason for why some economic analysts believe the Federal Reserve will do this is to push back against inflation. Up until now, the reason for why the Federal Reserve has kept the interest rate at 0% since March 2020 was because of the harsh effects that the US economy was feeling from COVID. During that time, trillions of dollars were pumped into the financial system. With unemployment being low, inflation being high as well as the overreliance of the Quantative Easing policy where where Central Banks (not just in the US but in many rich nations), have been purchasing bonds from the open market to help encourage individuals to borrow and to invest. However, it will be more expensive to borrow money from the bank now if there is an interest rate hike as the Federal Reserve would wrap up the bond buying stimulus program which has been one of the ways that has made borrowing easier. This is important for many of us who live here in Canada as the Governor of the Bank of Canada has also signaled interest rate hikes will be coming soon. However for now they have said that they will keep interest rates at where they are at right now.
#3 Chip Supply issue
Another supply chain issue that should be of concern to us all, is around the supply of electronic chips and semiconductors. If you don’t know what they are these items are very important in how we live our lives as they are the core components of what helps us run our smartphones and computers. These objects have been one of the core issue of the supply chain crisis as stores have seen a shortage in consoles like the Playstation 5 and the Xbox series X coming to their shelves, even if there are ones available the price tag of these products has gone up exponentially. US Commerce Secretary Gina Raimondo warns that US companies are still vulnerable to the supply chain crisis and that some of them could close or furlough workers if there is a minor disruption. Raimondo cites that “really anything” be it a covid outbreak, a natural disaster, political instability or a problem with equipment in any manufacturing facility in the world, would have ramifications for many in the US. Other reasons for lack of supply is around sanctions on suppliers in China as well as the lack of domestic production of it as well. According to the Financial Times, Raimondo is urging congress to pass the Chips Act which would unlock 52 billion dollars of subsidies that would encourage domestic chip manufacturing in the US. The bill was passed by the senate however it is facing difficulties in Congress.
#2 Italian Presidential Election
Voting for Italy’s new president went underway on Monday, as Italian members of the chamber of deputies, senate, as well as regional representatives decide who will be the next president after the term of Sergio Mattarella comes to a close. While it is a ceremonial position, the post is essential as the president is the one that accepts or denies the formation of a government or the calling of elections. The frontrunner for the race is current Italian Prime Minister and former head of the European Central Bank (ECB), Mario Draghi. Nicknamed Super Mario by some, Draghi has been credited for helping Italy retain a stable government after the resignation of Giuseppe Conte during his time he has overseen a successful vaccination rollout and an improving economy. Italians have given Mario Draghi a 60% approval rating of the job he has done so far while also uniting many of Italy’s political parties from the left and right as well. However there has been fear that a return to chaos could happen if Draghi leaves his post as Prime Minister. There have also been rumors that Mattarella could stay on as President to ensure there is stability as this would follow a precedent in 2013 when Mattarella’s predecessor, Giorgio Napolitano stayed on as president in 2013 due to the deadlock in the Italian Parliament over picking his successor. Another contender was Silvio Berlusconi, who has served as Italy’s prime minister for three times and is also known for being the chairman of Italian Football/Soccer team AC Milan. However Berlusconi declared he wouldn’t run in the race due to health reasons and the divisions in the Italian parliament as he is not a well loved figure from Italy’s left which any candidate running for president would need.
There has also been joke candidates that are in the running which includes actress Sophia Loren, porn star (you heard that right…) Rocco Sifferedi, and Former Head coach of the Italian National Football team, Giovanni Trapattoni. I wonder who would you guys support out of these three individuals?
#1 Ukraine-Russia tensions (again…)
This is the news story that has dominated the headlines for the past week, but for good reasons though. If you don’t know Russia has made Ukraine it’s hostage at this point by surrounding its borders with over 125,000 troops. The Russian president, Vladimir Putin’s ultimatum: Do not let Ukraine into NATO or else will invade the eastern part of Ukraine or even the whole country. If you do not know what NATO is there is a great article by Ben Wheeler of the Wheeler report giving an explanation of what it is. To put it short, the reason why Putin fears about Ukraine getting membership into NATO is because of the worry that Russia will lose an important sphere of influence in Europe.
You have to go back to before 1991 when Russia and Ukraine along with 13 other states formed the Soviet Union, this state was considered a superpower form almost all of the 20th century as they were seen as the United States’ main rival during the Cold War. Europe was the one of the main epicentres of the Cold War where the Western Half of countries backing the Democratic and Capitalist US and the Eastern Half backing the authoritarian and communist Soviet Union. However things changed after the breakup of the Soviet Union in 1991 when along with the Central Eastern European states in 1999, three of the Baltic states that used to be a part of the Soviet Union, Estonia, Latvia, and Lithuania, would join the EU in 2004. For Putin this was seen as the west being at Russia’s doorstep and if enlargement of NATO reached other former Soviet states like, Ukraine, Belarus, or Moldovia the fear of the reality that Russia would be surrounded by the West in both their western border with Europe, and around the Pacific where Russia has to deal with two Western allies in Japan and South Korea. Which Putin sees not just as a threat to the survival of the Russian state but also a threat to losing power.
This week there have been a lot of developments in the ongoing tensions between the West and Russia. In the capital city of Kyiv in Ukraine, citizens have lived their lives normal as usual as they heeded to the calls of their president Volodmyr Zelensky to stay calm. Zelensky has also called on the West to tone down its rhetoric as it is hurting Ukraine’s economy. That being said, residents in Kyiv are still preparing for the worst as many of them are making sure they have adequate supplies. While the families of embassy staff for both Russia, the US, Canada, UK, Australia, and Germany have evacuated. Meanwhile Google Maps is showing locations of bomb shelters for people to stay in. Kyiv’s metro system is also planned to be a shelter as well for many residents who are not able to reach the bomb shelters. Meanwhile in Eastern Ukraine, residents are preparing for anything as schools in the region have been teaching their students what to do if war is to breakout and what to do if shooting happens near the school. Ukrainian soldiers are also preparing as many of them are not thinking when the invasion will happen or even if it is going to happen, for them they are thinking if they will be able to survive against Russian attacks.
Meanwhile in Moscow, the American ambassador to Russia handed a letter to the Russian Foreign Minister, Sergei Lavrov, that contains what the US is willing to do to prevent an invasion. While there has been no word of what was written in the response, it is known that Russia’s key demand of Ukraine not joining NATO and the withdrawal of troops from Eastern Europe is not in the letter there are other options like more diplomacy surrounding military practices, missle placements and transparency. In a radio show on Friday, Lavrov said that Russia does not want war and that it is open to dialogue with the west. In Washington, The congressional Democrats are rushing the Ukraine Defense Bill that will send $500 million to Ukraine in defense assistance, This comes as the Biden administration faces pressure from both Republicans its own caucus in the congress and senate to push back aggressively against Russia.
The UK has given Ukraine its full backing as money and lethal aid in the form of anti tank missles. The support from the UK saw briefly on twitter the tag #Godsavethequeen trending in Ukraine. Canada has also been supporting Ukraine with a loan of $120 million dollars, expanding efforts to train Ukrainian troops and to extend the NATO mission in Latvia. This has been met with welcome by both NATO and Ukraine but experts and some in the Ukrainian government and the large community of Ukrainians in Canada say Canada needs to do more to protect Ukraine. The message from France, Germany and the EU has still remained a cautious approach however, President Macron of France has warned that Russia would face sanctions if it invades Ukraine. Olaf Scholz, Chancellor of Germany has also opened the idea of cancelling the approval of Nordstream 2 pipeline however Germany still faces criticism for blocking the sale of arms to Ukraine. China has warned the US to take the “security concerns” of Russia seriously
The governments of Finland and Sweden have also opened discussions over considering NATO memberships, as navy drills by the Russian navy in the Baltic sea close to the Swedish island Gotland, has caused concern for both Scandinavian countries about the security of their states. However it is known that Sweden’s ruling party, the centre-left Social Democrats are opposed to NATO membership contrasting from their centre Right rivals who support membership. Swedes are divided on the issue as 37% supports it and 35% against meanwhile 28% are undecided. Ireland has also gotten involved in the issue as the deputy PM Leo Varadker warns Russia to not go ahead with war games off the coast of Ireland if they are intent on seeking to defuse tensions. The move by Russia to hold its war games is seen as way to project its strength to Britain. Analysts also point to the fact that Ireland does not have much in military strength with only 9 navy ships and virtually no airforce which makes it an ideal place for them to do their military exercises in “Europe’s Blind spot” The fact that Ireland is a pacifist and neutral country is another factor as well.