India set to become third-largest consumer market, says WEF; these factors to drive consumption growth

By: Anuradha Choudhary 

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Rising income will transform India to a middle class-led one from a “bottom of the pyramid economy”, with consumer spending in the country to grow from the current $1.5 trillion to $6 trillion by 2030, a World Economic Forum report said Wednesday. At present, India is the sixth largest economy in the world with an annual GDP growth rate of 7.5% and domestic private consumption accounts for about 60% of the GDP. Bottom of the pyramid- also called the base of the pyramid – is a phrase in economics that refers to the poorest two-thirds of the economic human pyramid.

With this, the country is expected to emerge as the third-largest consumer market, just behind the US and China, WEF said in a report titled ‘Future of Consumption in Fast-Growth Consumer Market – India’. Rising incomes and the expansion of the middle class and high-income segment will reshape future consumption, the report said, adding that the growth in the middle class will lift approximately 25 million households out of poverty.

The Taliban and the Changing Nature of Pashtun Nationalism

by Mohammed Ayoob

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With American withdrawal from Afghanistan distinctly on the cards, it is imperative that one makes an objective assessment of the future of Afghanistan by factoring in the variable of Pashtun nationalism now primarily represented, even if in distorted fashion, by a resurgent Taliban. What has given the Taliban’s appeal potency is its ability to couch in religious terminology traditional Pashtun aspirations for dominance in Afghanistan as well as the tribes’ aversion to foreign interference in their land. Both these factors have been constants in Afghan politics going back at least to the nineteenth century. They are likely to continue to assert themselves with great vigor following the American withdrawal.

Most Pashtuns, who comprise over forty percent of the population of Afghanistan, believe that they are the rightful rulers of the country based on the history of the past three hundred years when Pashtun dynasties ruled Afghanistan most of the time. While the Persian-speaking Tajiks, who form around a quarter of the population, are more urban and educated than the Pashtun tribes and staffed a substantial portion of the Afghan bureaucracy, the ruling dynasties were invariably Pashtun.

Is Trump Right to Remove U.S. Troops from Afghanistan?

by Abdul Basit

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President Donald Trump’s announcement to pull out seven thousand U.S. troops from Afghanistan took both his allies and adversaries by surprise. As expected, Trump ran out of patience due to lack of progress on his South Asia policy announced last year in September and the worsening security situation in Afghanistan. The announcement came in the middle of the U.S.-Taliban talks in the United Arab Emirates (UAE) to find a politically negotiated end to the war. It contributed to a resignation from Defense Secretary James Mattis , the principle architect of Trump’s Afghan policy. 

Trump’s announcement will change the calculus on ground in Afghanistan with far-reaching consequences for regional peace and security. Though it remains to be seen if this change is for good or the worst. In any case, it is the beginning of the end of the seventeen-year war in Afghanistan.

Bangladesh: Post-Election Developments – Analysis

By S. Chandrasekharan

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As expected, in the highly charged political atmosphere, the overwhelming victory of the Awami League in the National Elections held on 30th December, has raised allegations that the election had been marred by violence and that it had not been fair. In fact, one of the editorials in the Daily Star described the victory of the Awami League as an “overkill”. 

The logic goes this way. It is generally believed that both the Awami League and the BNP have one third of the committed voters and it is only the third one third group that decides the fate/chances of one of the groups coming to power. 

But this time it has not worked this way. The BNP had explicitly associated itself with the JEI who had contested in twenty-five seats. The JEI being a religious fundamentalist organization had been banned by the Court from participating in the elections. Yet they did openly and when they saw the trend of their losing badly, they withdrew their candidacies. Another 22 of the BNP also withdrew from contesting when they found that it was going to be tough.

Challenges for the US-China Trade War ‘Truce‘

By Dingding Chen and Junyang Hu

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China and the United States agreed on a 90-day ceasefire in the trade conflict at the G-20 summit in Buenos Aires in December last year. Since then, roughly half of that 90 day period has come and gone. At the meeting, Chinese President Xi Jinping aimed to persuade Donald Trump, his American counterpart, to abandon plans to raise tariffs on $200 billion in Chinese goods to 25 percent starting in January 2019.

Although the deal remains fragile and tentative in certain analysts’ view, hinging on prospective negotiations, it turns out to be working, for now. Although China was perhaps more vulnerable economically, it was more urgent for the United States due to the characteristic of its political institutions, so this deal did extend some political breathing room to the two leaders after an escalating period of rivalry.

How China Might Repel the US Intellectual Property Trade Offensive

By Robert Farley

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So how does China fight back against the U.S. trade offensive on the IP front?

In my last column, I argued that it is becoming increasingly clear that the foundations of the trade disputes between the United States and China extend beyond intellectual property. With a distinctly zero-sum approach to U.S.-China economic relations and a “might makes right” approach to international trade, characterized by U.S. trade representative Robert Lighthizer, the very fact of China’s economic heft seems like a more important factor than any specific IP policies.

This should make us wonder if intellectual property violation is not, in some sense, the WMD of the U.S.-China trade war. To be clear, the Trump administration has determined that national security considerations, which for nearly 70 years tilted in favor of constructing a robust system of international trade (and deriving the benefits of that trade), now militate against such a system. The liberal international trading order, as it were, cannot abide the emergence of the sort of economic threat to the United States that China now poses.

How Is China Securing Its LNG Needs?

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In 2017, China surpassed South Korea to become the world’s second-largest liquefied natural gas (LNG) importer. In a few years, it might overtake Japan. But how is China securing its LNG needs? This is an important question for several reasons. First, when Chinese companies go overseas, they often trigger geopolitical anxiety, so it is worth asking whether Chinese companies are going out more than before; and if so, where and doing what deals? Second, China is the main growth market for LNG, and so Chinese companies can set a tone for the market as a whole; is there a shift in buying behavior or risk? And third, some U.S. project developers worry that the trade war with China will hurt their ability to progress to final investment decision (FID), while others, like Alaska, place their hopes on China; how real are those hopes and concerns?

China’s foray into LNG started in the early 2000s. China National Offshore Oil Corporation (CNOOC) was the first national oil company (NOC) to venture into LNG buying an equity stake in two projects in Indonesia and Australia and contracting to purchase LNG on a long-term basis from those projects (for a full list of the deals used for this analysis, see appendix). From 2006 to 2009, China National Petroleum Corporation (CNPC) and Sinopec joined CNOOC to sign long-term contracts but without acquiring any equity. In 2008 CNOOC also signed the first portfolio deal, where the LNG is not tied to any source but is delivered by a company with multiple options. From 2010 to 2014, the NOCs signed one or two long-term contracts a year, while also acquiring equity stakes in Australia, Russia, Mozambique, and Canada. Other Chinese companies started to sign contracts in 2010, and, from 2015 to 2017, non-NOCs accounted for most of the contracts LNG into China but without buying equity stakes. The NOCs came back to the market for long-term contracts in 2018 but again with no equity positions. In short, there have been a few twists and turns in these 18 years, and while it is not easy to compress this story into a few paragraphs, some clear patterns can be observed in how Chinese companies have gone about securing LNG.

Whither the Chinese Consumer?

JIM O'NEILL

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WASHINGTON, DC – For most of the past decade, the growing spending power of China’s expanding middle class has fueled the global economy. After the 2008 financial crisis, I argued that the United States and China would need to swap places – with the US saving more and consuming less, and China doing the opposite. Until the past year, that is largely what had been happening. Not so anymore.

Last week, Apple published a letter to shareholders revising down its expected revenues for the first quarter of 2019, citing an economic slowdown in China, which has become an increasingly important market for iPhone, Mac, and iPad sales. Though tech industry analysts are debating whether internal dynamics at Apple might also explain the change, the company’s new guidance nonetheless adds to the evidence that Chinese consumption is slowing.

A sustained decline in Chinese consumption would be even more worrying than the current US-China trade dispute. Given that US trade policies and other external influences should not have much effect on domestic Chinese spending, the problem may be more deeply rooted in China’s economic model.

Commentary: Will China go to war over Taiwan?

Peter Apps

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In the first week of 2019, as China grabbed headlines for landing a spacecraft on the far side of the moon, a New Year’s Day editorial in the nation’s official military newspaper told its readers that “war preparations” should be a top priority for the year. The following day, President Xi Jinping offered a forceful reminder of what Beijing considers its most likely focus of conflict to be: Taiwan.

China's banner reading 'One Country, Two Systems, One Unified China' is seen from a former military fort in Kinmen County, Taiwan, ahead of the 60th anniversary of the second Taiwan Strait crisis with China, August 20, 2018. REUTERS/Tyrone Siu 

China’s rulers have long regarded the island as a rogue province, with regaining control a point of honor for the ruling Communist Party and military alike. In a major speech on Wednesday, Xi warned the “problem” could not be held over for another generation. While he talked primarily of “peaceful unification,” he said Beijing reserves the right to use force if necessary. The speech brought a sharp rebuke from Taiwan, where residents remain strongly opposed to rejoining China, even under a Hong Kong-style “one country, two systems” deal.

Turkey abandons Uighurs in favor of Chinese investment

Killian Cogan 

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“If you don’t come back home now, you’ll never be able to see your homeland again.” Memet Atawulla received the threatening message last May on WeChat, China’s main messaging app. Though written in the Uighur language, he immediately knew it had come from the Chinese secret services.

“They wanted me to go back,” explains Atawulla, 31, as he sips a soda in one of Ankara’s glitzy cafes. Originally from the oasis town of Hotan in Xinjiang, northwest China, he moved to Turkey in 2016 to pursue a master’s degree on a scholarship program.

“When I told the agents I was staying here, they said they would leave me alone if I cooperated.” As with many Uighurs living abroad, the Chinese secret services asked Atawulla to become an informant for them. He refused, and is now certain traveling back home would result in his arrest.

Why Iran Waits Staying in the Nuclear Deal Is Its Worst Option, Except for All the Others

By Henry Rome

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Shortly after U.S. President Donald Trump withdrew from the Iran nuclear deal, Supreme Leader Ayatollah Ali Khamenei pledged that Iran would not tolerate the simultaneous restriction of its economy and its nuclear program. “This bad dream will never come true,” Khamenei said in June 2018.

Yet Iran has accepted exactly that. Iran has continued to comply with the restrictions on its nuclear program under the Joint Comprehensive Plan of Action (JCPOA), which was implemented three years ago this month. And Trump reimposed unilateral sanctions in August and November 2018, which means that Tehran is also bearing severe economic costs. Iran has never before endured this combination of economic sanctions and nuclear restrictions. As policymakers and analysts debate how and whether to keep Iran in the JCPOA, it is important to understand why Iran has stayed put in the first place—and will likely continue to do so this year.

The Geopolitics of 2069 Are More Chaotic Than You Can Imagine

Ian Bremmer

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People say we’re about to enter the “Asian century.” That would be true if the world still did centuries. But it doesn’t; change driven by technological advancements now comes so rapidly and with such force that it’s challenging to know what the next year of geopolitics will look like, let alone the next 50.

That said, we are undeniably embarking on an “Asian decade” (maybe even two)—a period that largely coincides with our current G-Zero era of world politics, which is defined principally by its lack of global leadership. What that means in practice is that there is no country (or group of countries) leading global responses to global problems such as climate change or the next pandemic. So, as advanced industrial economies continue to struggle to balance democracy’s dynamism with the toll globalization has taken on large segments of their societies, China’s state-capitalist approach looks set to continue barreling on.

Is Hungary becoming a rogue state in the center of Europe?

James Kirchick

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Since Hungary's Viktor Orban won reelection, his behavior has called into question his democratic bona fides and his basic trustworthiness as an ally of the United States and member of the democratic Western world. Increasingly, Hungary is behaving like a rogue state, argues James Kirchick. This piece originally appeared in the Washington Post.

Most of the international criticism directed at Hungary over the past nine years has focused on domestic indicators such as the rule of law, separation of powers and press freedom. Prime Minister Viktor Orban has been remarkably blunt about his designs for Hungary, citing China, Russia and Turkey as models. After an election in April widely deemed free but not fair, he sounded a triumphal note, declaring that “the era of liberal democracy is over.”

Bolsonaro Could Realize His Critics’ Worst Fears—and His Supporters’ High Hopes

Frida Ghitis

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The new year marked the beginning of a new era for Latin America’s largest country. Jair Bolsonaro, the far-right winner of Brazil’s presidential election, assumed office amid a remarkable swirl of contrasting expectations. While the former army captain’s incendiary declarations during the election campaign last fall sparked fears among millions of Brazilians and others abroad, a less noticed phenomenon took shape in the weeks leading up to his inauguration on Jan. 1: Brazilians, by large majorities, are optimistic about his tenure.

In two surveys last month, Brazilian pollsters found that a stunning 75 percent of respondents approved of Bolsonaro, and two-thirds expected the new administration to bring about a turnaround in Brazil’s economic fortunes. That is notable, and a bit of a head-scratcher, considering that for years the most popular politician in the country has been former President Luiz Inacio Lula da Silva, a leftist leader who made his name as a union organizer and a campaigner for social justice, essentially embracing policies that Bolsonaro diametrically opposes.

The Falsehoods That Drive 'Open Borders' Theory

by Philip Carl Salzman

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The idea of "open borders" is to open one's heart and arms to everyone in the world, open one's country to all comers, to encourage everyone to come. "Open borders" is an increasingly popular idea in the West. Mainstream politicians of the European Union and of the largest countries of the Union have thrown open their borders and admitted all comers. So too in North America. Canada has welcomed anyone who infiltrates the partially unguarded border, as well as returning Islamic State terrorists. In the U.S., the Democrat Party increasingly opposes enforcing border protection and removing "illegal aliens" (to use the official government term), called "dreamers" by Democrats as they chant "abolish ICE" (Immigration and Customs Enforcement).

Why Open Borders?

The new enthusiasm for open borders is a result of the confluences of three lines of political thought, each one ill advised: multiculturalism, utopianism, and "social justice."

Multiculturalism

Shelter from the Storm in 2019

BARRY EICHENGREEN

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BRUSSELS – What would have to happen for this to be a tranquil year economically, financially, and politically? Answer: a short list of threats to stability would have to be averted.

First, the trade war between the United States and China would have to be placed on hold. In November and December, financial markets reacted positively to each hint of a negotiated settlement and negatively to each mention of renewed hostilities – and for good reason: tariffs that disrupt trade flows and supply chains do global growth no good. And, as we know, what happens in financial markets doesn’t stay in financial markets: outcomes there powerfully affect consumer confidence and business sentiment.

Second, the US economy will have to grow by at least 2%, the consensus forecast incorporated into investor expectations. If growth comes in significantly lower – whether because the sugar high from the December 2017 tax cuts wears off, the Federal Reserve chokes off the expansion, or for some other reason – financial markets will move sharply downward, with negative implications for confidence and stability.

Globalization at a Crossroads

GORDON BROWN

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Over the course of the past decade, the world has changed more than at any other time since the World War II era. And, as economic and geopolitical power seeps away from the West, the United States, rather than leading a new multilateral front, has embarked on a self-defeating project of atavistic unilateralism.

LONDON – Whether or not one realizes it, 2018 may have been a historic turning point. Poorly managed globalization has led to nationalist “take-back-control” movements and a rising wave of protectionism that is undermining the 70-year-old American-led international order. The stage is set for China to develop its own parallel international institutions, auguring a world divided between two competing global-governance systems.

Globalization 4.0

KLAUS SCHWAB

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GENEVA – After World War II, the international community came together to build a shared future. Now, it must do so again. Owing to the slow and uneven recovery in the decade since the global financial crisis, a substantial part of society has become disaffected and embittered, not only with politics and politicians, but also with globalization and the entire economic system it underpins. In an era of widespread insecurity and frustration, populism has become increasingly attractive as an alternative to the status quo.

But populist discourse elides – and often confounds – the substantive distinctions between two concepts: globalization and globalism. Globalization is a phenomenon driven by technology and the movement of ideas, people, and goods. Globalism is an ideology that prioritizes the neoliberal global order over national interests. Nobody can deny that we are living in a globalized world. But whether all of our policies should be “globalist” is highly debatable.

Shaping Europe’s Present and Future

FEDERICA MOGHERINI

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After a decade of economic and political crises, the project of European integration continues to face existential challenges. But while some observers worry about the EU’s future, its High Representative for Foreign Affairs and Security Policy is confident that through continued cooperation, Europeans can secure their interests even in an era of global upheaval.

As the High Representative of the European Union for Foreign Affairs and Security Policy, Federica Mogherini has overseen EU foreign and security policy since November 2014. With her term coming to an end in 2019, Mark Leonard of the European Council on Foreign Relations asked Mogherini about the state of European security, the future of the international order, arms control, migration, and a broad range of other issues.

Mark Leonard: So far, the European Union has demonstrated an ability to maintain its unity over key issues like Brexit and the maintenance of the post-Crimea sanctions on Russia. Is this unity likely to hold in 2019, particularly given the looming EU parliamentary elections and changes at the top of the European Commission and Council?

John Mearsheimer and the Future of the Damaged Liberal Dream

by David C. Hendrickson

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As Mearsheimer describes in his new book: liberalism is a truly hopeless doctrine, shot full of contradictions and absurdities.

Review of John J. Mearsheimer, The Great Delusion: Liberal Dreams and International Realities (New Haven: Yale University Press, 2018). By David C. Hendrickson

John Mearsheimer is an intrepid thinker whose distinguished body of work has the virtues of intellectual honesty and fearless courage. He pulls no punches, is unafraid in questioning various pieties. With his latest book on the great delusion that is liberalism he has written a polemic that scores many effective points against the “liberal interventionism” of the recent past. He skewers a set of policies that have brought great woe to the peoples of the Greater Middle East, with results injurious both to them and to the United States. He likens these policies to the sort of social engineering analyzed by James Scott in Seeing Like a State , a practice the obnoxiousness of which is easily seen by Americans when done by others, less easily detected when done by themselves, but nevertheless undoubtedly pernicious in its wanton use of violence and its totalizing tendencies (185–187). In Mearsheimer’s view, the Bush Doctrine epitomizes the liberal mentality in foreign affairs, the seemingly insatiable desire to bring democracy and human rights to all four corners of the globe. Against these and other “liberal” impulses he counterpoises the need for “realism.” There is no entry for neoconservatism in the index to The Great Delusion , but what Mearsheimer means by liberalism is a pretty good proxy for what came to be identified with neoconservatism in foreign policy—that it is America’s national mission and security imperative to plant human rights and democracy across the globe. So the essential strategy of the book is to discredit neoconservatism by pilloring liberalism. While I concur with the objective, I bemoan the strategy.

America's Old School Foreign Policy Ways Must Change

by Greg R. Lawson

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President Donald Trump has upset the elite Washington, DC establishment. This was most apparent following the surprise resignation of Secretary of Defense Jim Mattis. It was also apparent when he announce that he planned to reduce and remove the number of troops in Syria and Afghanistan.

Mattis is a great American; however, Jim Mattis’ entire worldview has been shaped by the bipartisan consensus that formed during the Cold War and reached sacrosanct status after the 1991 collapse of the Soviet Union. Unfortunately, this consensus is wrong and has led to nearly three full decades of failure.

The consensus pushes for simultaneous confrontation of great powers Russia and China. Rather than seeking a “Reverse Nixon” to China to counter the rising power of China; instead, the United States is putting pressure on both and pushing them into a marriage of geopolitical convenience. This forced marriage foreign-policy plan is also “ America’s Ultimate Geopolitical Nightmare .” Recently, Graham Allison brought a graybeard sensibility by outlining the same possibility.

A Second Chance for the TPP

By Phillip Orchard

The Trans-Pacific Partnership may have life in it yet. On his first day in office, nearly two years ago, U.S. President Donald Trump withdrew from the TPP, effectively leaving the landmark trade pact for dead. As it turns out, the agreement was only mostly dead. On Dec. 30, the clumsily rechristened Comprehensive and Progressive Agreement for Trans-Pacific Partnership came into force. The pact removes some 98 percent of tariffs across an 11-member bloc that accounts for more than one-tenth of global trade and includes critical supply chain and investment hubs on three continents.

Its revival is a remarkable diplomatic feat – undercutting narratives of the impending doom of global free trade. And it illustrates the sense of urgency Pacific Rim countries are feeling to manage the disruptions accompanying China’s rise, with or without the United States. Thus, the pact is about more than expanding trade among member states; it’s also about countering growing threats to the existing order that fueled the region’s rise.

What will it take to monitor and secure mobile military networks?

By: Mav Turner  

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Brig. Gen. Kenneth L. Kamper, U.S. Army Operational Test Command, visits the General Dynamics facility during a Risk Reduction Evaluation (RRE) event at Fort Bliss, Texas, Nov. 19, 2015. The event is responsible for soldier training and evaluation of the Command Post Commuting Environment (CP CE) version two, a web-based widget system that consolidates and simplifies separate capabilities commanders use for missions related to all the warfighting functions. (U.S. Army photo by Devon Bistarkey / Released)

The modern military landscape requires a network portable enough to be deployed anywhere, and one also reliable as a traditional network infrastructure. As such, the Department of Defense (DoD) is engaged in an all-out network modernization initiative designed to allow troops everywhere, from the population-dense cities in Afghanistan to the starkly remote Syrian Desert, to access reliable communications and critical information.

RUSSIANS FEEL MORE PREPARED THAN U.S. FOR CYBER WAR, POLL SHOWS

BY TOM O'CONNOR

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More Russians feel that their country is prepared for cyber warfare than those in the United States, a recent poll has shown.

On Wednesday, the Pew Research Center released the results of a poll regarding the public's perceptions of cyber attacks and whether or not their nation could handle them. The survey found that 27,612 respondents from 26 countries polled last summer were evenly split, with 47 percent saying their country was ready and an equal amount saying it was not.

Among the most confident nations, second only to Israel's 73 percent, was Russia with 67 percent saying the country was "ready for a major cyber incident." Respondents in the U.S. were more evenly divided, with 53 percent saying that their nation's defenses were adequately suited for such an event.

What a major cyber-attack could mean for markets

By Isabelle Mateos y Lago, BlackRock

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The geopolitical risks that tend to have the greatest market impact? We find it's the ones that investors aren't focused on. One risk that falls into that category, according to our analysis: the risk of a major cyber-attack. Cyber-attacks by state and non-state actors on critical physical, financial and technology infrastructure are increasing in sophistication, volume and intensity, and digital warfare is becoming an important tool for nation states to interfere in the domestic affairs of rivals. We see cyber-attacks on business-critical infrastructure and major elections as a persistent and growing risk whose impact markets are underestimating. Our BlackRock Geopolitical Risk Indicator for a major cyber-attack(s)shows only modest market attention to this risk, implying that a cyber-attack could have an out-sized market impact. 

Planet Earth Report –“The War Game That Could Have Ended the World”

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The “Planet Earth Report” connects you to the day’s news on the science, discoveries, and events changing our planet and the future of the human species.

Chinese and Russian Scientists Teamed Up to Manipulate the Earth’s Atmosphere –The two countries were responsible for disrupting the planet’s ionosphere in a series of experiments this June.

Enabling opportunities: 5G, the internet of things, and communities of color

Nicol Turner Lee

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Fifth-generation (5G) mobile networks are expected to be the next big leap in mobile broadband. Peak download speeds as high as 20 gigabits-per-second will enable specialized tasks like remote precision medicine, connected cars, virtual and augmented reality, and a wide array of internet of things (IoT) applications.

Nationwide, resilient 5G networks will be needed to accommodate the growing demand for high-speed mobile broadband. While some researchers and analysts suggest that existing 4G Long-Term Evolution (LTE) technology is sufficient for the majority of IoT use cases, this paper argues that only high-speed, high-capacity, low-latency 5G broadband networks will meet the demands of increasing data-intensive applications. Moreover, 5G will support the massive numbers of devices that will simultaneously access the network, which will be far more than 4G LTE can handle. As 5G enables IoT applications, like health care, education, energy and transportation, it is imperative that they operate as anticipated, without fail, every time.

The past decade of war has eroded the decision-making confidence of young leaders, Army general says

By: Kyle Rempfer 

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Young Army leaders are suffering from America’s long wars spent building partner forces, the commander of U.S. Army Training and Doctrine Command said Monday.

Conflicts in the Middle East, where the Army has spent significant time in an advise-and-assist role for local forces, has sapped officers and enlisted alike of their confidence in making tough choices in battle, Gen. Stephen Townsend told reporters at an event hosted by the Association of the United States Army.

Townsend said he noticed the problem during briefings on the service’s mission command doctrine, which is designed to help troops on the ground adjust their original plan in combat without contacting senior leaders.

REPORT IDENTIFIES EMERGING SECURITY THREATS

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An unclassified synopsis of long-range emerging national security threats warns the U.S. military and its allies will need to be nimble in the face of widening efforts by adversaries to achieve objectives without resorting to conflict and to also be prepared for widening threats from advanced weapons such as hypersonic missiles, electronic warfare and cyber weapons.

In unconventional competition, adversaries such as Russia and China are attempting and succeeding in meeting security and economic objectives by means short of open conflict, according to the December report to Congress from the Government Accountability Office. It is an unclassified version of a classified report provided to Congress in September, and is based on input from the Defense Department, State Department, Department of Homeland Security and intelligence agencies.

Instead of tanks, bombs and missiles, adversaries are stealing intellectual property and data by penetrating information systems; they are also seizing disputed land, undermining U.S. economic policies, using proxy forces to interfere with U.S. diplomatic objects, and aiding and encouraging extremist groups.

Quality over quantity: U.S. military strategy and spending in the Trump years

James N. Miller and Michael E. O’Hanlon

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The Trump administration, after achieving large increases in the U.S. defense budget during its first two years in office, has—to say the least—sent conflicting signals regarding its preferences for defense spending for the next fiscal year. After initially announcing plans for continued growth from $716 billion in fiscal year 2019 to $733 billion in 2020, President Trump directed the Department of Defense (DoD) to plan instead for reductions to a $700 billion budget. In early December 2018, Trump went as far as to call current levels of U.S. defense spending “crazy,” only to announce plans for a $750 billion defense budget just a week later. (These figures include war expenses and nuclear-weapons activities in the Department of Energy.)

Wherever the Trump administration finally lands by the time it submits its proposed defense budget to Capitol Hill in early 2019, the reality is that Congress has a vote, and indeed the final word. On the one hand, there is a strong case for stable, predictable, modest growth in defense spending given the challenging security situation and the increased efficiency that comes with predictable budgets as opposed to cycles of feast and famine. On the other hand, a newly Democratic House of Representatives, Tea Party elements in the GOP, and the nation’s perilous fiscal situation reinforce the case for frugality and hard choices. And a defense budget of $700 billion for 2020 would still be much larger than the Cold War average or President Obama’s last budget of just over $600 billion.