The NYT: “To help Russia evade sanctions, China would have to offer a viable substitute to the American dollar. But Chinese money — the renminbi — is barely used outside of China. Only 3 percent of the world’s business is done using the redback. Even Russia and China conduct their trade mostly in U.S. dollars and euros.
“What’s more, the risks of helping Russia avoid economic ruin may be greater for China than any possible reward. Much of China’s own economy depends on the U.S. dollar and the financial edifice that underpins it. Chinese companies are active around the globe, using the American financial system to pay employees, buy materials and make investments. China is the world’s largest exporter, and is paid for its goods mainly in dollars.
“Should Beijing run afoul of the sanctions against Russia, China’s own financial stability would be put at risk at a time when its leaders have emphasized caution. And besides, the few lifelines that Chinese leaders could feasibly offer Russia would not be strong enough to help the country survive a financial blackout from the United States and its allies.”
A crisis at a property company exposes deep, dangerous, and often unrecognized weaknesses in the Chinese economy.
From the NYT: “The revelations [in the Pandora Papers] are global in scope. But if there is one country at the system’s heart, it is Britain. Taken together with its partly controlled territories overseas, Britain is instrumental in the worldwide concealment of cash and assets. …
“But it’s the world that suffers the most. For shady businesspeople and long-serving political leaders, the offshore ecosystem provides impunity, cloaking capital and shielding wealth. Unaccountable and often untraceable, the system ensures that prosperity remains the preserve of the few. To overturn inequality and injustice, exposed so starkly by the pandemic, we must take on the havens — and the vested interests in London that protect them.”
Belize, Fiji and Mozambique (among many other countries) “owe staggering amounts of money to various foreign lenders. They face staggering climate risks, too. And now, with the coronavirus pandemic pummeling their economies, there is a growing recognition that their debt obligations stand in the way of meeting the immediate needs of their people — not to mention the investments required to protect them from climate disasters.”
With dozens of countries struggling to manage both staggering debt and mounting climate disasters, some financial leaders are calling for green debt relief.
And probably a lot more pragmatic.
New measures by the European Central Bank and the German government to combat the economic damage caused by the pandemic have exceeded expectations.
Foreign Policy: “The sorest financial cankers of the Trump era are all emanations of this contemporary world political economy: the oligarch, the tax-avoiding supercorporation, the offshore-owned luxury properties used to launder money, and the untraceable dark money circulating at home and from authoritarian states. This makes the world safe for kleptocracy and authoritarianism and harms U.S. national interests by facilitating the corruption of business and political elites at home. It is not just the place where global unfettered capitalism directly impacts the country’s national politics and security but where Democrats need to rise to the challenge. …
“The crisis of the Trump presidency has shown that the boundaries between home and abroad are no longer firm. Undermining the international financial system that empowered kleptocracy, and with it autocrats like Vladimir Putin, requires tracing dirty money through not just the Caymans and Kyiv, Ukraine, but Wilmington, Delaware, and Las Vegas. The most vital step Washington can take to fight kleptocracy is banning anonymous shell companies within the United States itself. …
“Fighting kleptocracy is at the heart of an internationalist foreign policy that recognizes that the modern world is deeply interconnected and thus national security depends on understanding and managing these gaps. A Biden administration would have the opportunity to reorient the U.S. alliance system toward these 21st-century challenges by tying U.S. domestic reform with a common set of anti-kleptocratic standards shared with the European Union and the United Kingdom. …
“The battle against kleptocracy is more than a contest over corruption or development in faraway countries. It is a vital front in the war to make the world more habitable for the global middle class, which includes America’s own long-suffering workers. A focus on kleptocracy is a first step to reconciling U.S. domestic and foreign policies and making the world more just, and safer, for Americans and others.”
A new administration can make the changes needed to break a rotten global system.