U.S. Defense Secretary Pete Hegseth visited the Demilitarized Zone separating the two Koreas on Monday as he began a two-day visit to ally South Korea for security talks.Hegseth and South Korean Defense Minister Ahn Gyu-back received a briefing from military officials at Observation Post Ouellette, a site near the military demarcation line that past U.S. presidents, including Donald Trump during his first term in 2019, had visited to peer across the border into North Korea and meet with American soldiers.Hegseth and Ahn also visited the Panmunjom border village, where an armistice was signed to pause the 1950-53 Korean War. Ahn’s ministry said the visit “reaffirmed the firm combined defense posture and close coordination” between the allies.Hegseth did not mention North Korea, which has ignored Washington and Seoul’s calls for dialogue in recent years while accelerating the expansion of its nuclear weapons and missile programs.South Korea’s military also said Monday that the country’s Joint Chiefs of Staff Chairman Gen. Jin Yong-sung and his U.S. counterpart, Gen. Dan Caine, oversaw a combined formation flight aboard South Korean and U.S. F-16 fighter jets above a major U.S. military base in Pyeongtaek.The flight, conducted for the first time, was intended to demonstrate the allies’ “ironclad combined defense posture” and the “unwavering” strength of the alliance, Seoul’s Defense Ministry said.Hegseth and Ahn, who previously met on Saturday at a defense ministers’ meeting in Malaysia, will attend the allies’ annual defense talks in Seoul on Tuesday.The talks are expected to cover key alliance issues, including South Korea’s commitment to increase defense spending and the implementation of a previous agreement to transfer wartime operational control of allied forces to a binational command led by a South Korean general with a U.S. deputy.There are also concerns in Seoul that the Trump administration may demand much higher South Korean payments for the U.S. military presence in the country or possibly downsize America’s military footprint to focus more on China.Hegseth’s visit comes days after Trump traveled to South Korea for meetings with world leaders, including South Korean President Lee Jae Myung and Chinese President Xi Jinping, on the sidelines of this year’s Asia-Pacific Economic Cooperation summit in Gyeongju.During his meeting with Trump on Wednesday last week, Lee reaffirmed South Korea’s commitment to increase defense spending to reduce the financial burden on America and also called for U.S. support in South Korean efforts to acquire nuclear-powered submarines.Trump later said on social media that the United States will share closely held technology to allow South Korea to build a nuclear-powered submarine, and that the vessel will be built in the Philly Shipyard, which was bought last year by South Korea’s Hanwha Group. The leaders also advanced trade talks, addressing details of $350 billion in U.S. investments South Korea committed to in an effort to avoid the Trump administration’s highest tariffs.
U.S. Defense Secretary Pete Hegseth visited the Demilitarized Zone separating the two Koreas on Monday as he began a two-day visit to ally South Korea for security talks.
Hegseth and South Korean Defense Minister Ahn Gyu-back received a briefing from military officials at Observation Post Ouellette, a site near the military demarcation line that past U.S. presidents, including Donald Trump during his first term in 2019, had visited to peer across the border into North Korea and meet with American soldiers.
Hegseth and Ahn also visited the Panmunjom border village, where an armistice was signed to pause the 1950-53 Korean War. Ahn’s ministry said the visit “reaffirmed the firm combined defense posture and close coordination” between the allies.
Hegseth did not mention North Korea, which has ignored Washington and Seoul’s calls for dialogue in recent years while accelerating the expansion of its nuclear weapons and missile programs.
South Korea’s military also said Monday that the country’s Joint Chiefs of Staff Chairman Gen. Jin Yong-sung and his U.S. counterpart, Gen. Dan Caine, oversaw a combined formation flight aboard South Korean and U.S. F-16 fighter jets above a major U.S. military base in Pyeongtaek.
The flight, conducted for the first time, was intended to demonstrate the allies’ “ironclad combined defense posture” and the “unwavering” strength of the alliance, Seoul’s Defense Ministry said.
Hegseth and Ahn, who previously met on Saturday at a defense ministers’ meeting in Malaysia, will attend the allies’ annual defense talks in Seoul on Tuesday.
The talks are expected to cover key alliance issues, including South Korea’s commitment to increase defense spending and the implementation of a previous agreement to transfer wartime operational control of allied forces to a binational command led by a South Korean general with a U.S. deputy.
There are also concerns in Seoul that the Trump administration may demand much higher South Korean payments for the U.S. military presence in the country or possibly downsize America’s military footprint to focus more on China.
Hegseth’s visit comes days after Trump traveled to South Korea for meetings with world leaders, including South Korean President Lee Jae Myung and Chinese President Xi Jinping, on the sidelines of this year’s Asia-Pacific Economic Cooperation summit in Gyeongju.
During his meeting with Trump on Wednesday last week, Lee reaffirmed South Korea’s commitment to increase defense spending to reduce the financial burden on America and also called for U.S. support in South Korean efforts to acquire nuclear-powered submarines.
Trump later said on social media that the United States will share closely held technology to allow South Korea to build a nuclear-powered submarine, and that the vessel will be built in the Philly Shipyard, which was bought last year by South Korea’s Hanwha Group. The leaders also advanced trade talks, addressing details of $350 billion in U.S. investments South Korea committed to in an effort to avoid the Trump administration’s highest tariffs.
GYEONGJU, South Korea—Amid the pageantry and backslapping, President Trump’s weeklong Asian swing drew attention to a sour point for allies: The U.S. demand that they spend more to respond to a rising threat of Chinese aggression.
Washington first pressured Europeans to boost their military budgets shortly after Trump took office in January. That push ultimately proved successful, with many allies pledging to increase spending.
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[ad_2] Alexander WardLong known for its massive scale and bureaucratic complexity, the Pentagon is slowly transforming itself into a more streamlined organization, much like a Silicon Valley company.
The “fail fast” mentality, once confined to startups, is taking root in the Department of War, previously known as the Department of Defense, thanks to AI and other systems that are revolutionizing the way the U.S. approaches global conflicts, speakers at the Fortune Most Powerful Women conference said on Tuesday.
Radha Iyengar Plumb, a former chief digital and AI intelligence officer at the Pentagon who is now the vice president of AI-first transformation at IBM said the Pentagon is in some ways similar to a $1 trillion business. It has about three million employees, more ground vehicles than FedEx, and a supply chain three times larger than that of Walmart. Yet, for years, the massive amount of data linked to its operations was handled manually and inefficiently.
Analysts would “literally swivel chair between multiple different computers” to gather intelligence and paste it into PowerPoint slides, she noted.
“When it is the world around you that is changing over time, that swivel chair just gets updated slowly,” Plumb said. “People don’t have full information about the world around them and that makes it harder to make good decisions.”
However, the government’s more recent efforts are slowly improving this situation. Shannon Clark, a former Pentagon analyst and current head of defense growth at Palantir, cited Project Maven, a Pentagon initiative launched in 2017 to consolidate data and integrate AI into battlefield operations, as a key driver of improvements. Palantir is a government contractor assisting the Pentagon in executing Project Maven.
Still, modernization also requires a new mindset, said Clark. The government and Congress need to take more risks, although they are already making strides, thanks in part to some outside influence, she added.
“They’ve seen what the companies in Silicon Valley are doing,” said Clark. “I think they’re seeing that that’s the only way that we’re going to be able to forge forward faster, is by watching and failing and then learning from those mistakes, just as much as learning from success.”
Incorporating AI into government has already helped drive results in part by speeding up how fast the Pentagon can buy and deliver things, said Plumb.
Another positive development over the years has been the emergence of numerous defense technology companies that are helping the U.S. gain an edge over its adversaries, said Clark.
“All of this technology was used for the 12-day war. All this technology was used for the conflict with Russia and Ukraine, and it’ll be used for whatever the next conflict is as well,” she said. “We really need America’s best and brightest to be working on this.”
Marco Quiroz-Gutierrez
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WARSAW—For more than a decade, Poland has prepared for the worst-case scenario: becoming the front line in a war between Russia and the West.
With an eye on growing Russian aggression in Europe, Warsaw’s military planners built out the country’s armed forces, turning it last year into the largest European military in the North Atlantic Treaty Organization. It ramped up military spending to 4.7% of gross domestic product this year—the highest in the alliance. A multibillion-dollar spending spree has put Poland among the biggest buyers of U.S. weapons.
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Thomas Grove
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We set out across the Indo-Pacific in August to assess U.S. military readiness and consult with allies. In the Philippines, Palau and Taiwan, we found partners determined to resist Chinese coercion and willing to share the burden.
In Taiwan we spoke with President Lai Ching-tse and senior officials. They understand the gravity of the threat and are responding with urgency to meet it. Mr. Lai has committed to increasing defense spending and mobilizing the public behind a resilience plan.
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Roger Wicker
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It’s been nearly two weeks since President Donald Trump declared a crime emergency in the nation’s capital. But while the crime crackdown has yielded somewhat underwhelming results—”nearly 2,000 officers made fewer than 400 arrests,” reports Reason‘s Joe Lancaster—the campaign has been massively successful in galvanizing Trump’s base and providing the president and his Cabinet with ample P.R. opportunities.
The takeover has allowed Trump to flex his muscles, but it’s coming at a steep cost to American taxpayers. The Intercept reports that the use of military forces in Washington, D.C., could cost $1 million per day. With more National Guard members flooding into the capital, the campaign could end up costing hundreds of millions of dollars, according to The Intercept.
But this isn’t the first time that Trump has used—or suggested using—taxpayer money on expensive vanity projects. Here are five other especially wasteful examples.
In June, Trump hosted a “big, beautiful” military parade to celebrate the 250th anniversary of the Army. The event, which happened to coincide with the president’s 79th birthday, included a barrage of tanks, jet flyovers, and soldiers walking through the nation’s capital, and ended up costing American taxpayers $25 million to $45 million. That’s “$277,778–$500,000 per minute,” Reason‘s Billy Binion reported.
Trump has also displayed America’s military power at his Independence Day celebrations, including the 2019 “Salute to America,” which ran up a tab of more than $13 million, and the 2020 events in D.C. and Mount Rushmore that cost close to $15 million. Next year’s Independence Day, which will be America’s 250th birthday, is expected to be even bigger. The One Big Beautiful Bill Act (OBBBA) appropriated $150 million to the Interior Department for “events, celebrations, and activities surrounding the observance and commemoration of the 250th anniversary of the founding of the United States.”
2. Iced Out ICE Vehicles
The OBBBA also allocated nearly $30 billion to Immigration and Customs Enforcement (ICE) for detention facility maintenance, transportation costs, and recruitment efforts at the agency. ICE appears to be sparing no expense.
In addition to offering starting salaries of nearly $90,000 and signing bonuses up to $50,000, ICE has also wasted taxpayer money on marketing gimmicks and vehicle upgrades. Recently, the agency spent “$2.4 million for Chevrolet Tahoes, Ford Expeditions, and other vehicles, as well as custom graphic wraps,” writes Reason‘s Autumn Billings. These gold-detailed wraps include the words DEFEND THE HOMELAND, INTEGRITY, COURAGE, and ENDURANCE.
This vehicle spending is on top of the $700,000 that ICE spent on two gold-wrapped trucks, which the Department of Homeland Security (DHS) used in a (cringe) recruitment campaign on X.
On Tuesday, DHS Secretary Kristi Noem announced that the entire U.S.-Mexico border wall will be painted black. “That is specifically at the request of the president, who understands that in the hot temperatures down here when something is painted black it gets even warmer and it will make it even harder for people to climb,” said Noem.
During his first stint in the White House, Trump proposed an identical plan. The Washington Post reviewed a copy of federal painting estimates at the time, which showed “costs ranging from $500 million for two coats of acrylic paint to more than $3 billion for a premium ‘powder coating’ on the structure’s 30-foot steel bollards.”
More than five years later, the cost to paint the border wall is sure to be higher.
In 2018, Trump signed a $3.9 billion agreement with Boeing that would see the airplane manufacturer deliver two new jets to the Air Force One fleet by 2022. The planes are now expected to be delivered by 2027, years behind schedule and billions of dollars over budget.
Under the terms of the contract, the cost overruns will be paid for by Boeing. Despite these delays, Trump may soon be flying in a luxury jetliner that was gifted to him by the Qatari government. While the president has called this new Air Force One “free,” renovating the plane will cost Americans millions of dollars. As The New York Times reports, the Pentagon recently transferred $934 million from a nuclear missile project account to a classified project, which “congressional budget sleuths have come to think…almost certainly” includes the renovation of this new jet.
In January, Trump revived an executive order that he signed in his first administration to establish a National Garden of American Heroes. The garden, which is expected to open next year on America’s 250th birthday, will include 250 life-sized statues of American heroes.
But the $34 million project has run into a basic, but serious, issue: America doesn’t have enough quality sculptors to complete the garden by next July or a designated location to put it. Daniel Kunitz, editor of Sculpture magazine, told Politico that the idea “seems completely unworkable.”
Jeff Luse
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CNN
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Republican presidential candidates delivered a smattering of false and misleading claims at the first debate of the 2024 election – though none of the eight candidates on stage in Milwaukee delivered anything close to the bombardment of false statements that typically characterized the debate performances of former President Donald Trump, the Republican front-runner who skipped the Wednesday event.
Sen. Tim Scott of South Carolina inaccurately described the state of the economy in early 2021 and repeated a long-ago-debunked false claim about the Biden-era Justice Department. Former New Jersey Gov. Chris Christie misstated the sentence attached to a gun law relevant to the investigation into the president’s son Hunter Biden. Florida Gov. Ron DeSantis misled about his handling of the Covid-19 pandemic, omitting mention of his early pandemic restrictions.
Below is a fact check of those claims and various others from the debate, some of which left out key context. In addition, below is a brief fact check of some of Trump’s claims from a pre-taped interview he did with Tucker Carlson, which was posted online shortly before the debate aired. Trump made a variety of statements that were not true.
DeSantis criticized the federal government for its handling of the Covid-19 pandemic, claiming it had locked down the economy, and then said: “In Florida, we led the country out of lockdown, and we kept our state free and open.”
Facts First: DeSantis’s claim is misleading at best. Before he became a vocal opponent of pandemic restrictions, DeSantis imposed significant restrictions on individuals, businesses and other entities in Florida in March 2020 and April 2020; some of them extended months later into 2020. He did then open up the state, with a gradual phased approach, but he did not keep it open from the start.
DeSantis received criticism in March 2020 for what some critics perceived as a lax approach to the pandemic, which intensified as Florida beaches were packed during Spring Break. But that month and the month following, DeSantis issued a series of major restrictions. For example, DeSantis:
-From CNN’s Daniel Dale
Nikki Haley, the former South Carolina governor and US ambassador to the United Nations, said: “Donald Trump added $8 trillion to our debt, and our kids are never going to forgive us for this.”
Facts First: Haley’s figure is accurate. The total public debt stood at about $19.9 trillion on the day Trump took office in 2017 and then increased by about $7.8 trillion over Trump’s four years, to about $27.8 trillion on the day he left office in 2021.
It’s worth noting, however, that the increase in the debt during any president’s tenure is not the fault of that president alone. A significant amount of spending under any president is the result of decisions made by their predecessors – such as the creation of Social Security, Medicare and Medicaid decades ago – and by circumstances out of a president’s control, notably including the global Covid-19 pandemic under Trump; the debt spiked in 2020 after Trump approved trillions in emergency pandemic relief spending that Congress had passed with overwhelming bipartisan support.
Still, Trump did choose to approve that spending. And his 2017 tax cuts, unanimously opposed by congressional Democrats, were another major contributor to the debt spike.
-From CNN’s Daniel Dale and Katie Lobosco
North Dakota Gov. Doug Burgum claimed that Biden’s signature climate bill costs $1.2 trillion dollars and is “just subsidizing China.”
Facts First: This claim needs context. The clean energy pieces of the Inflation Reduction Act – Democrats’ climate bill – passed with an initial price tag of nearly $370 billion. However, since that bill is made up of tax incentives, that price tag could go up depending on how many consumers take advantage of tax credits to buy electric vehicles and put solar panels on their homes, and how many businesses use the subsidies to install new utility scale wind and solar in the United States.
Burgum’s figure comes from a Goldman Sachs report, which estimated the IRA could provide $1.2 trillion in clean energy tax incentives by 2032 – about a decade from now.
On Burgum’s claim that Biden’s clean energy agenda will be a boon to China, the IRA was specifically written to move the manufacturing supply chain for clean energy technology like solar panels and EV batteries away from China and to the United States.
In the year since it was passed, the IRA has spurred 83 new or expanded manufacturing facilities in the US, and close to 30,000 new clean energy manufacturing jobs, according to a tally from trade group American Clean Power.
-From CNN’s Ella Nilsen
With the economy as one of the main topics on the forefront of voters’ minds, Scott aimed to make a case for Republican policies, misleadingly suggesting they left the US economy in record shape before Biden took office.
“There is no doubt that during the Trump administration, when we were dealing with the COVID virus, we spent more money,” Scott said. “But here’s what happened at the end of our time in the majority: we had low unemployment, record low unemployment, 3.5% for the majority of the population, and a 70-year low for women. African Americans, Hispanics, and Asians had an all-time low.”
Facts First: This is false. Scott’s claims don’t accurately reflect the state of the US economy at the end of the Republican majority in the Senate. And in some cases, his exaggerations echo what Trump himself frequently touted about the economy under his leadership.
By the time Trump left office and the Republicans lost the Senate majority in January 2021, US unemployment was not at a record low. The US unemployment rate dropped to a seasonally adjusted rate of 3.5% in September 2019, the country’s lowest in 50 years. While it hovered around that level for five months, Scott’s assertion ignores the coronavirus pandemic-induced economic destruction that followed. In April 2020, the unemployment rate spiked to 14.7% — the highest level since monthly records began in 1948. As of December 2020, the unemployment rate was at 6.7%.
Nor was the unemployment rate for women at a 70-year low by the end of Trump’s time in office. It reached a 66-year low during certain months of 2019, at 3.4% in April and 3.6% in August, but by December 2020, unemployment for women was at 6.7%.
The unemployment rates for African Americans, Hispanics, and Asians were also not at all-time lows at the end of 2020, but they did reach record lows during Trump’s tenure as president.
-From CNN’s Tara Subramaniam
Scott said that the Justice Department under President Joe Biden is targeting “parents that show up at school board meetings. They are called, under this DOJ, they’re called domestic terrorists.”
Facts First: It is false that the Justice Department referred to parents as domestic terrorists. The claim has been debunked several times – during the uproar at school boards over Covid-19 restrictions and anti-racism curriculums; after Kevin McCarthy claimed Republicans would investigate Merrick Garland with a majority in the House; and even by a federal judge. The Justice Department never called parents terrorists for attending or wanting to attend school board meetings.
The claim stems from a 2021 letter from The National School Boards Associations asking the Justice Department to “deal with” the uptick in threats against education officials and saying that “acts of malice, violence, and threats against public school officials” could be classified as “the equivalent to a form of domestic terrorism and hate crimes.” In response, Garland released a memo encouraging federal and local authorities to work together against the harassment campaigns levied at schools, but never endorsed the “domestic terrorism” notion.
A federal judge even threw out a lawsuit over the accusation, ruling that Garland’s memo did little more than announce a “series of measures” that directed federal authorities to address increasing threats targeting school board members, teachers and other school employees.
-From CNN’s Hannah Rabinowitz
Haley, the former ambassador to the United Nations and governor of South Carolina, said the US is spending “less than three and a half percent of our defense budget” on Ukraine aid, and that in terms of financial aid relative to GDP, “11 of the European countries have given more than the US.”
Facts First: This is partly true. Haley’s claim regarding the US aid to Ukraine compared to the total defense budget is slightly under the actual percentage, but it is accurate that 11 European countries have given more aid to Ukraine as a percentage of their total GDP than the US.
As of August 14, the US has committed more than $43 billion in military aid to Ukraine since the beginning of the war in Ukraine, according to the Defense Department. In comparison, the Fiscal Year 2023 defense budget was $858 billion – making aid to Ukraine just over 5% of the total US defense budget.
As of May 2023, according to a Council of Foreign Relations tracker, 11 countries were providing a higher share in aid to Ukraine relative to their GDP than the US – led by Estonia, Latvia, Lithuania, and Poland.
-From CNN’s Haley Britzky
Former Vice President Mike Pence said Wednesday that the Trump administration “spent funding to backfill on the military cuts of the Obama administration.”
Facts First: This is misleading. While military spending decreased under the Obama administration, it was largely due to the 2011 Budget Control Act, which received Republican support and resulted in automatic spending cuts to the defense budget.
Mike Pence, a senator at the time, voted in favor of the Budget Control Act.
-From CNN’s Haley Britzky
Christie said President Biden’s son Hunter Biden was “facing a 10-year mandatory minimum” for lying on a federal form when he purchased a gun in 2018.
Facts First: Christie, a former federal prosecutor, clearly misstated the law. This crime can lead to a maximum prison sentence of 10 years, but it doesn’t have a 10-year mandatory minimum.
These comments are related to the highly scrutinized Justice Department investigation into Hunter Biden, which is currently ongoing after a plea deal fell apart earlier this summer.
As part of the now-defunct deal, Hunter Biden agreed to plead guilty to two tax misdemeanors and enter into a “diversion agreement” with prosecutors, who would drop the gun possession charge in two years if he consistently stayed out of legal trouble and passed drug tests.
The law in question makes it a crime to purchase a firearm while using or addicted to illegal drugs. Hunter Biden has acknowledged struggling with crack cocaine addiction at the time, and admitted at a court hearing and in court papers that he violated this law by signing the form.
The US Sentencing Commission says, “The statutory maximum penalty for the offense is ten years of imprisonment.” There isn’t a mandatory 10-year punishment, as Christie claimed.
During his answer, Christie also criticized the Justice Department for agreeing to a deal in June where Hunter Biden could avoid prosecution on the felony gun offense. That deal was negotiated by special counsel David Weiss, who was first appointed to the Justice Department by former President Donald Trump.
-From CNN’s Marshall Cohen
Burgum and Scott got into a back and forth over IRS staffing with Burgum saying that the “Biden administration wanted to put 87,000 people in the IRS,” and Scott suggesting they “fire the 87,000 IRS agents.”
Facts First: This figure needs context.
The Inflation Reduction Act, which passed last year without any Republican votes, authorized $80 billion in new funding for the IRS to be delivered over the course of a decade.
The 87,000 figure comes from a 2021 Treasury report that estimated the IRS could hire 86,852 full-time employees with a nearly $80 billion investment over 10 years.
While the funding may well allow for the hiring of tens of thousands of IRS employees over time, far from all of these employees will be IRS agents conducting audits and investigations.
Many other employees will be hired for the non-agent roles, from customer service to information technology, that make up most of the IRS workforce. And a significant number of the hires are expected to fill the vacant posts left by retirements and other attrition, not take newly created positions.
The IRS has not said precisely how many new “agents” will be hired with the funding. But it is already clear that the total won’t approach 87,000. And it’s worth noting that the IRS may not receive all of the $80 billion after Republicans were able to claw back $20 billion of the new funding as part of a deal to address the debt ceiling made earlier this year.
-From CNN’s Katie Lobosco
Trump repeated a frequent claim during his interview with Carlson that streamed during the GOP debate that his retention of classified documents at Mar-a-Lago after leaving the White House was “covered” under the Presidential Records Act and that he is “allowed to do exactly that.”
Facts First: This is false. The Presidential Records Act says the exact opposite – that the moment presidents leave office, all presidential records are to be turned over to the federal government. Keeping documents at Mar-a-Lago after his presidency concluded was in clear contravention of that law.
According to the Presidential Records Act, “upon the conclusion of a President’s term of office, or if a President serves consecutive terms upon the conclusion of the last term, the Archivist of the United States shall assume responsibility for the custody, control, and preservation of, and access to, the Presidential records of that President.”
The sentence makes clear that a president has no authority to keep documents after leaving the White House.
The National Archives even released a statement refuting the notion that Trump’s retention of documents was covered by the Presidential Records Act, writing in a June news release that “the PRA requires that all records created by Presidents (and Vice-Presidents) be turned over to the National Archives and Records Administration (NARA) at the end of their administrations.”
-From CNN’s Hannah Rabinowitz
While discussing electric vehicles, Trump claimed that California “is in a big brownout because their grid is a disaster,” adding that the state’s ambitious electric vehicle goals won’t work with the grid in such shape.
Facts First: Trump’s claim that California’s grid is currently in a “big brownout” and is a “disaster” isn’t true. California’s grid suffered rolling blackouts in 2020, but it has performed quite well in the face of extreme heat this summer, owing in large part to a massive influx of renewable energy including battery storage. These big batteries keep energy from wind and solar running when the wind isn’t blowing and sun isn’t shining. (Batteries are also being deployed at a rapid rate in Texas, a red state.)
Another reason California’s grid has stayed stable this year even during extreme temperature spikes is the fact that a deluge of snow and rain this winter and spring has refilled reservoirs that generate electricity using hydropower.
As Trump insinuated, there are real questions about how well the state’s grid will hold up as California’s drivers shift to electric vehicles by the millions by 2035 – the same year it will phase out selling new gas-powered cars. California state officials say they are preparing by adding new capacity to the grid and urging more people to charge their vehicles overnight and during times of the day when fewer people are using energy. But independent experts say the state needs to exponentially increase its clean energy while also building out huge amounts of new EV chargers to achieve its goals.
-From CNN’s Ella Nilsen
Trump claimed to Carlson, “I had the strongest border in the history of our country, and I built almost 500 miles of wall. You know, they’d like to say, ‘Oh, was it less?’ No, I built 500 miles. In fact, if you check with the authorities on the border, we built almost 500 miles of wall.”
Facts First: This needs context. Trump and his critics are talking about different things when they use different figures for how much border wall was built during his presidency. Trump is referring to all of the wall built on the southern border during his administration, even in areas that already had some sort of barrier before. His critics are only counting the Trump-era wall that was built in parts of the border that did not have any previous barrier.
A total of 458 miles of southern border wall was built under Trump, according to a federal report written two days after Trump left office and obtained by CNN’s Priscilla Alvarez. That is 52 miles of “primary” wall built where no barriers previously existed, plus 33 miles of “secondary” wall that was built in spots where no barriers previously existed, plus another 373 miles of primary and secondary wall that was built to replace previous barriers the federal government says had become “dilapidated and/or outdated.”
Some of Trump’s rival candidates, such DeSantis and Christie, have used figures around 50 miles while criticizing Trump for failing to finish the wall – counting only the primary wall built where no barriers previously existed.
While some Trump critics have scoffed at the replacement wall, the Trump-era construction was generally much more formidable than the older barriers it replaced, which were often designed to deter vehicles rather than people on foot. Washington Post reporter Nick Miroff tweeted in 2020: “As someone who has spent a lot of time lately in the shadow of the border wall, I need to puncture this notion that ‘replacement’ sections are ‘not new.’ There is really no comparison between vehicle barriers made from old rail ties and 30-foot bollards.”
Ideally, both Trump and his opponents would be clearer about what they are talking about: Trump that he is including replacement barriers, his opponents that they are excluding those barriers.
-From CNN’s Daniel Dale
CNN
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House Speaker Kevin McCarthy said Sunday that the Defense Department appropriations bill that was paused last week before it even made it to the floor for debate will come up for a vote this week “win or lose.”
“We will do that this week,” McCarthy said on Fox News, adding “unfortunately I had a handful of members last week that literally stopped the Department of Defense appropriations coming forward,” referring to members of his right flank who have stymied two appropriations bills thus far.
“I gave them an opportunity this weekend to try to work through this, and we’ll bring it to the floor win or lose,” McCarthy told Maria Bartiromo.
House Republican leadership was hoping to put a series of standalone spending bills on the floor to try to build consensus and unite the conference, but it’s been a gamble. Leadership was left scrambling over the defense spending bill after one member of the House Freedom Caucus, Rep. Ralph Norman of South Carolina, voted against the bill in the Rules Committee and another, Rep. Dan Bishop of North Carolina, told CNN he would vote against the rule on the floor.
Both the debate and the scheduled votes were pulled minutes before the chamber was due to gavel in Wednesday.
McCarthy on Sunday pointed a finger at the Senate, saying not only does the House have to work with the upper chamber, but that the Senate “blew up last week too. They couldn’t pass anything.”
“And unfortunately on the Senate side, the Republicans and Democrats over there are writing bills to spend more money. Ours are the most conservative, but if we don’t ask them, we’re weaker in the negotiations. So anytime a Republican wants to hold back and stop the floor from working when Republicans have the majority, that puts us in a weaker position to win in the end of the day,” he said.
But McCarthy said a government shutdown “would only give strength to the Democrats. It would give the power to Biden.”
With no serious progress on Capitol Hill as Congress stares down a spending deadline at the end of the month, lawmakers are acknowledging that at this point a government shutdown is not only possible, but may soon be inevitable.
That’s particularly true if the political dynamics at play among McCarthy, the hardliners in his conference and the US Senate don’t change fast.
“I want to make sure we don’t shut down. I don’t think that is a win for the American public and I definitely believe that will make (Republicans’) hand weaker,” McCarthy said.
CNN
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Party leaders in Washington are waging an urgent campaign Monday to convince Democrats and Republicans to get behind compromise legislation that would avert a first-ever national default, with each side proclaiming victory following marathon talks.
Prospects for passage of the bill, based on the agreement struck between President Joe Biden and Republican House Speaker Kevin McCarthy, grew Sunday as many centrist Democrats fell in line and Republicans maintained confidence that they would be able to carry the support of the majority of their House conference in a pivotal vote expected Wednesday.
In both parties’ sights are those in the political middle, who leaders are wagering will swallow some provisions they disagree with in order to suspend the federal borrowing limit through January 1, 2025 – after the next presidential election – and avoid default. The bill caps non-defense spending, temporarily expands work requirements for some food stamp recipients and claws back some Covid-19 relief funds.
The release of the bill text Sunday evening amounted to a consequential moment for both Biden and McCarthy, whose political futures could hinge on their ability to pass the legislation while also selling it as a victory for their respective parties.
Speaking from the White House on Sunday, Biden hailed the agreement as critical to preventing economic disaster.
“It’s a really important step forward,” he said from the Roosevelt Room. “It takes the threat of catastrophic default off the table, protects our hard-earned economic recovery, and the agreement also represents a compromise – which means no one got everything they want, but that’s the responsibility of governing.”
The president shrugged off concerns from some Democrats who worry he gave away too much in his negotiations with Republicans.
“They’ll find I didn’t,” he said.
In a private call Sunday with House Democrats, Biden’s briefers defended their dealmaking with McCarthy, going into detail about what they had prevented from being added to the bill, according to multiple sources. They argued they stopped Republicans from pushing even stiffer work requirements and beat back efforts to repeal the Inflation Reduction Act and gut and gut Biden’s signature 2021 infrastructure law.
After those briefings, many Democrats signaled that they were willing to support the plan simply because there’s no other viable option to avoid default, lawmakers told CNN.
“It’s not a victory, but it’s a lot better (than) what might have happened if there were default,” one Senate Democrat told CNN after an evening briefing.
Members of two major centrist groups – the New Democrat Coalition and Problem Solvers Caucus – are expected to largely support the plan, according to multiple sources. That represents roughly 100 Democrats, which could be enough to offset the losses from members of the hard-right who are furious over McCarthy’s dealmaking.
Several members of the hard-line House Freedom Caucus have already harshly criticized the plan, vowing to try blocking it from passage.
McCarthy has insisted to House Republicans that Democrats “got nothing” in the negotiations, and he worked to amplify government spending caps and new work requirements for food stamps as critical wins long sought by the GOP.
But like Biden, McCarthy acknowledged the agreement required concessions from both sides.
“It doesn’t get everything everybody wanted,” McCarthy told reporters in the Capitol on Sunday. “But, in divided government, that’s where we end up. I think it’s a very positive bill.”
For McCarthy, the first big test will come Tuesday in the House Rules Committee, a panel that must adopt a rule to allow the bill to be approved by a majority of the House. To win the speakership, McCarthy agreed to name three conservative hardliners – Reps. Ralph Norman of South Carolina, Chip Roy of Texas and Thomas Massie of Kentucky – to the committee, a major concession since usually the powerful panel is stacked with close allies of the leadership.
Norman and Roy have emerged as sharp critics of the debt limit deal so far, while Massie was quiet while waiting for bill text to be released. If all three voted against the rule in committee, that would kill the bill – unless any Democrats vote to advance the rule.
McCarthy’s allies sought to play down the conservative revolt.
“When you’re saying that conservatives have concerns, it is really the most colorful conservatives,” Rep. Dusty Johnson said on “State of the Union.”
Passing the bill through the House will not be the final step. The package must also clear the Senate, where any single senator could stall progress for several days. On Sunday, a handful of powerful Senate Republicans had raised concerns about the deal’s defense spending during a Senate GOP conference call, a source on the call said.
But with the support of Senate GOP Leader Mitch McConnell and expected backing of Senate Majority Leader Chuck Schumer, several Senate sources say there is a high likelihood there’ll be 60 votes to break a filibuster attempt. The timing of the final votes in the Senate could slip into Friday or the weekend.
Ottawa, Canada
CNN
—
President Joe Biden will make a long-awaited trip to America’s northern neighbor Thursday evening, a 24-hour whirlwind visit where he will press to elevate a concerted effort to repair a bilateral relationship as the two nations confront growing geopolitical challenges.
Despite the brief nature of the trip, White House officials say the crowded agenda underscores the relationship’s importance – and the substantial shift away from the fractures that developed during former President Donald Trump’s time in office. Still, they acknowledge there are a series of economic, trade and immigration challenges that must be navigated between the two governments.
Biden’s visit includes a meeting with Canadian Prime Minister Justin Trudeau, an address to the nation’s parliament in Ottawa, and a cozy reception at an elaborate gala dinner. For Biden, who last traveled to Ottawa shortly after Trump was elected in 2016, the visit will also mark a moment to underscore close ties and the critical role Canada has played in the Western alliance that has supported Ukraine since Russia’s invasion more than a year ago.
“This visit is about taking stock of what we’ve done, where we are, and what we need to prioritize for the future,” said White House National Security Council strategic communications coordinator John Kirby.
The two leaders and political allies are expected to discuss North American supply chains and critical minerals, climate change, the opioid crisis and critical defense cooperation – including efforts to modernize the North American Aerospace Defense Command. And while no major breakthroughs are expected, thornier issues like the deteriorating situation in Haiti, immigration and trade are also expected to be on the agenda.
“We’re going to talk about our two democracies stepping up to meet the challenges of our time. That includes taking concrete steps to increase defense spending, driving a global race to the top on clean energy, and building prosperous and inclusive economies,” Kirby told reporters on Wednesday.
Biden will “reaffirm the United States’ commitment to the US-Canada partnership and promote our shared security, shared prosperity, and shared values,” press secretary Karine Jean-Pierre wrote in a statement announcing the trip earlier this month.
The two men are also expected to discuss Russia’s ongoing invasion of Ukraine. Trudeau, the longest-serving leader in the G7, has been an ally to Biden in providing military and financial assistance to the country during the Kremlin’s invasion.
“This is a meaningful visit. Canada is one of the United States’ closest allies and friends and has been now for more than 150 years,” Kirby added.
Vincent Rigby, a former national security and intelligence adviser to Trudeau and current senior adviser at CSIS, told CNN that as Biden travels to Ottawa with “the world on his mind,” the current geopolitical environment in the Indo-Pacific and Eastern Europe means that Canadian security contributions will be a key topic in Friday’s bilateral meeting.
“I think the big question is going to be, OK, Canada, where do you stand on all this? And I would suggest that Canada has been struggling to match some of its allies over the last number of years in responding to this unstable security environment. So it will probably be the elephant in the room to a certain extent,” he told CNN.
Rigby noted that while efforts to increase Canadian defense spending, modernize NORAD or contain China are not new, it’s an issue that has garnered a greater public profile the last few months following the Chinese spy balloon’s incursion into North American airspace and recent allegations about Beijing attempting to interfere in Canadian elections.
While Canada has announced $3.8 billion in spending to help upgrade NORAD and has recently purchased F-35s, Canada’s overall percentage of GDP spent on defense remains well below the 2% asked of NATO members.
“I think that the prime minister needs to reassure the president that he’s going to do what’s necessary to have a military in Canada that’s ready to respond to these kinds of threats, particularly on the international stage,” Rigby added. “This isn’t just about blindly following the United States’ lead. It’s about doing what’s right for Canada and Canada’s national interest.”
Preparations for the president’s visit were already well-underway on Wednesday with American and Canadian flags draped along Wellington Street across the way from the Parliament complex, and Canadian security services – buttressed by police units from neighboring cities like Toronto – conducting practice runs for expected motorcade routes.
Biden’s travel agenda will kick into gear from the moment he lands at Ottawa International Airport on Thursday night, when he will hold a bilateral meeting with the governor general of Canada – the country’s apolitical and ceremonial head of state – followed by a meet and greet at Trudeau’s official residence.
On Friday, Biden makes the short trip from his hotel to Parliament Hill where will have a bilateral with Trudeau, an expanded meeting with their respective staff, and then Biden’s address to Parliament. The two leaders will then hold a joint news conference in the afternoon before Friday evening’s dinner ahead of a late evening flight back to the US.
First lady Dr. Jill Biden – who is accompanying her husband in Ottawa – will also take part in additional events with Sophie Grégoire Trudeau, the prime minister’s wife.
Despite being fellow liberals and political allies who are closely aligned on many issues, Prime Minister Trudeau and President Biden have had their share of disagreements. Early on in Biden’s administration, Trudeau expressed disappointment over the president’s unwillingness to back off his decision to cancel the Keystone XL pipeline and the Canadians have previously raised concerns over the impact of “Buy American” measures on trade between the two countries.
And while Friday’s meetings will heavily feature areas of cooperation between the two countries, there will also be discussions on more complicated issues like immigration, trade and Haiti.
As both leaders face an influx of migrants and mounting political pressure, they will be pressed to finalize changes to the Safe Third Country Agreement. Trudeau has been facing blowback domestically over hundreds of migrants crossing Roxham Road, a remote street that connects Champlain, New York, with Hemmingford, Quebec.
“The only way to effectively shut down, not just Roxham Road but the entire border, to these irregular crossings is to renegotiate the Safe Third Country Agreement,” Trudeau said at a news conference last month, pointing to the thousands of kilometers of shared unguarded border between the US and Canada and adding that people will cross elsewhere even if the Roxham Road access point is closed.
Signed in 2002, the agreement applies to people transiting through a country where they could have claimed asylum because it’s deemed safe. It means that anyone entering a land port of entry could be ineligible to make a claim and therefore returned to the US. But Roxham Road is not an official crossing, meaning that people who transit there could still seek protections in Canada even though they passed through the US.
Biden and Trudeau have previously touted their relationship on a slew of issues, including in accepting refugees, and CNN reported earlier this month that it’s unlikely the latest migration trend along the northern border will damage that bond.
Kirby, a top White House official, said Wednesday the US is “well aware” of Canadian concerns regarding migration and that he has “no doubt” the two leaders will discuss it.
“We’ll be talking about issues of migration, which affects us both. There are more people on the move in this hemisphere than there have been since World War Two and that affects both our countries,” he said.
Fueling the increase in immigration this year and also expected to be brought up in Friday’s talks are discussions on the ongoing crisis in Haiti where the government is edging closer to becoming a failed state as criminal gangs in the capital become increasingly violent and the country faces interlocking health, energy and security crises.
United Nations officials are warning that the situation “continues to spiral out of control,” and in the first two weeks of March, the gang violence has killed 208 people, injured 164 others and led to 101 kidnappings, according to the UN. Last year there were 2,183 homicides and 1,359 kidnappings in Haiti, which nearly doubles the statistics from the previous year, according to the UN.
Late last year the United States drafted a UN Security Council resolution, following calls from the Haitian government for outside intervention, to support the deployment of a rapid action force to Haiti to help the government’s national police wrest back control of the crisis-ridden country.
While the US has no plans to lead such a force, national security adviser Jake Sullivan said in January that Canada had “expressed interest in taking on a leadership role.” Although Kirby on Wednesday said that they’re not yet at a point where all the players involved can make any definitive decisions and that the two leaders will continue their discussions.
“We have continued to stand with the people of Haiti, and we will continue to. Obviously, this current situation is heart wrenching and we need to continue to be there for the people of Haiti. But we need to make sure that the solutions are driven by the people of Haiti themselves,” Trudeau said in January, pointing to the military and financial support Canada and the US have already provided.
Part of the calculus for Canada, according to Rigby, is that any sort of military intervention could potentially become a “quagmire” and would require distinct objectives and goals. But also, as Canada’s top general has publicly acknowledged, the Canadian armed forces may lack the capacity to lead such a mission.
“It might be a bridge too far for them to go into Haiti. So that’s why I think you’re seeing a little bit of reluctance on the part of the Canadian government to engage on Haiti as much as I think they’d like to help,” Rigby told CNN.
American presidents typically visit Canada as one of their first trips abroad, but the ongoing Covid-19 pandemic and war in Ukraine at the beginning of Biden’s administration complicated matters and delayed Biden’s first visit North. Instead, the newly minted US president in early 2021 opted for his first phone call and virtual bilateral meeting to be with Trudeau.
“When we work together, as the closest of friends should, we only make each other stronger,” Biden said at the time.
Since then, the Bidens have hosted the Trudeaus at the White House and the two men have met repeatedly in other international fora and on the sidelines of other multilateral settings, including most recently in January at a summit of North American leaders.
Biden and Trudeau have known each other for years and describe their relationship as a close one that has only grown more critical in the year since Russia’s invasion.
One of Biden’s final trips as vice president was to attend a state dinner held in his honor in Ottawa; during his toast, Biden recounted the call he received from Trudeau’s father Pierre – then serving as prime minister – when his first wife and daughter died in a car accident.
It’s a personal element that helped animate a level of warmth Biden attempted to convey at the time despite the trepidation among US allies about what the next administration would mean for relations.
“The friendship between us is absolutely critical to the United States, our well-being, our security, our sense of ourselves,” Biden said at the time.
But he also implicitly framed what would become a turbulent four years ahead – and pointed directly to the younger Trudeau as someone who would become a critical player during that period.
“The world’s going to spend a lot of time looking to you, Mr. Prime Minister, as we see more and more challenges to the liberal international order than any time since the end of World War II,” Biden told Trudeau at the time.
Biden’s predecessor Donald Trump visited Canada only once for a Group of 7 summit in Quebec. The two leader’s bad blood was on full display afterward when Trump revoked his signature from a joint statement and called Trudeau “very dishonest and weak” on Twitter.
Hong Kong
CNN
—
China has set an official economic growth target of “around 5%” for 2023, as it seeks to revive the world’s second-largest economy after a year of tepid growth because of pandemic measures.
It will also expand its defense budget 7.2%, marking a slight increase over growth the previous year.
Both figures for the coming year were released at the opening of the annual gathering of the National People’s Congress (NPC), the country’s rubber-stamp legislature, which draws nearly 3,000 delegates to Beijing for the next eight days.
“China’s economy is staging a steady recovery and demonstrating vast potential and momentum for further growth,” outgoing Premier Li Keqiang told delegates while delivering a government work report at the opening of the congress on Sunday.
The economy added more than 12 million urban jobs last year, with the urban unemployment rate falling to 5.5%, according to the work report, which emphasized China’s focus on ensuring stable growth, employment and prices amid global inflation and set the GDP target.
China also unveiled its annual military budget for 2023, which will increase 7.2% to roughly 1.55 trillion yuan ($224 billion) in a draft budget report released Sunday morning.
The spending increase marks the second year in a row that the annual hike in military spending has exceeded 7% and tops last year’s 7.1% growth, amid rising geopolitical tensions and a regional arms race. As with other recent years, the figure stays well below the symbolically significant double-digit expansion.
“The armed forces should intensify military training and preparedness across the board, develop new military strategic guidance, devote greater energy to training under combat conditions and make well-coordinated efforts to strengthen military work in all directions and domains,” Li’s work report said.
The GDP target and military spending are among the most closely watched in the opening day proceedings, with the GDP target figure in particular being monitored this year as China emerges from its economically draining zero-Covid policy. The new figure appears modest against what some analysts had predicted could be a more robust aim for the year ahead.
The NPC meeting is a key yearly political event that occurs alongside a gathering of China’s top political advisory body, with the events together known as the Two Sessions.
This is the first Two Sessions since Chinese leader Xi Jinping secured a norm-breaking third term atop the Chinese Communist Party hierarchy in October. Xi is set to enter his third term as President, a largely ceremonial title, during the congress.
China’s GDP expanded by just 3% in 2022, widely missing the official target of “around 5.5%” mainly due to prolonged Covid restrictions. It was the second lowest annual growth rate since 1976, behind only 2020 – when the initial Covid outbreaks nearly paralyzed the economy.
In December, after the Communist Party abruptly ended its zero-Covid policy, a massive wave of infections swept across the country, throwing supply chains and factories into chaos. But the disruptions started to fade away in January, and the economic recovery picked up pace last month.
Official data released Wednesday showed China’s factories had their best month in nearly 11 years in February, underscoring how quickly economic activity has bounced back following the end of the Covid exit wave. The services and construction industries also had their best performance in two years.
Moody’s Investors Service has since raised its China growth forecast to 5% for both 2023 and 2024, up from 4% previously, citing a stronger than expected rebound in the short term.
Analysts had predicted a difficult track to recovery for China amid global headwinds, which may have also been reflected in the conservative 2023 target of “around 5%” announced Sunday.
The global economy will weaken further this year as rising interest rates and Russia’s war in Ukraine continue to weigh on activity, the International Monetary Fund estimated in January. Global growth will likely slow from 3.4% in 2022 to 2.9% in 2023.
China is set to release its import and export data for the first two months of this year on Tuesday, which will provide a glimpse into demand for global trade.
During the congress, the ruling Communist Party’s new economic team, including various ministers and financial chiefs, will be unveiled with other key appointments – already selected by the Communist Party leadership – also approved. Premier Li’s replacement will be formally appointed during the meeting, which runs until March 13.
The new economic team will face the tough task of reviving the Chinese economy as it navigates a growing array of challenges, including sluggish consumption, rising unemployment, a historic downturn in real estate, and increasing tension with the United States over technology sanctions.
The 7.2% increase in planned defense spending marks the first time in the past decade that the budget growth rate has increased for three consecutive years, as Beijing continues to modernize and build-up its military, while asserting pressure on Taiwan – the self-governing island democracy the Chinese Communist Party claims as its own despite never having ruled.
China now controls the world’s largest navy by size and continues to advance its fleet of nuclear submarines and stealth fighter jets.
The military budget expanded 7.1% to 1.45 trillion yuan in 2022, compared with 6.8% the previous year. The last year China’s annual defense spending grew by double digits was 2015. The size of this year’s budget is more than double that of ten years ago.
Chinese officials have repeatedly sought to portray their military spending as reasonable relative to other countries like the United States – part of China’s bid to present itself as a peaceful power, despite its aggression in the region including its militarization of the South China Sea and heavy patrolling around Taiwan.
During a press conference Saturday ahead of the opening day, NPC spokesperson Wang Chao said China’s defense budget maintained a “relatively moderate and reasonable growth rate.”
“China’s defense expenditure as a percentage of GDP has remained stable over the years. It remains basically stable, lower than the world average,” Wang said.
London
CNN
—
When Russia launched its full-scale invasion of Ukraine one year ago, Western countries hit back with unprecedented sanctions to punish Moscow and pile pressure on President Vladimir Putin. The aim: to deal an economic blow so severe that Putin would reconsider his brutal war.
Russia’s economy did weaken as a result. But it also showed surprising resilience. As demand for Russian oil fell in Europe, Moscow redirected its barrels to Asia. The country’s central bank staved off a currency crisis with aggressive capital controls and interest rate hikes. Military expenditure supported the industrial sector, while the scramble to replace Western equipment and technology lifted investment.
“The Russian economy and system of government have turned out to be much stronger than the West believed,” Putin said in a speech to Russia’s parliament Tuesday.
Yet cracks are starting to show and they will widen over the next 12 months. The European Union — which spent more than $100 billion on Russian fossil fuels in 2021 — has made huge strides in phasing out purchases. The bloc, which dramatically reduced its dependence on Russian natural gas last year, officially banned most imports of Russian crude oil by sea in December. It enacted a similar block on refined oil products this month.
Those measures are already straining Russia’s finances as it struggles to find replacement customers. The government reported a budget deficit of about 1,761 billion rubles ($23.5 billion) for January. Expenditure jumped 59% year-over-year, while revenue plunged 35%. Deputy Prime Minister Alexander Novak announced that Russia would cut oil production by about 5% starting in March.
“The era of windfall profits from the oil and gas market for Russia is over,” Janis Kluge, an expert on Russia’s economy at the German Institute for International and Security Affairs, told CNN.
Meanwhile, the ruble has slumped to its weakest level against the US dollar since last April. The currency’s weakness has contributed to high inflation. And most businesses say they can’t conceive of growing right now given high levels of economic uncertainty, according to a recent survey by a Russian think tank.
These dynamics place the country’s economy on a trajectory of decline. And they will force Putin to choose between ramping up military spending and investing in social goods like housing and education — a decision that could have consequences both for the war and the Russian public’s support of it.
“This year could really be the key test,” said Timothy Ash, an associate fellow in the Russia and Eurasia program at Chatham House, a think tank.
In a bid to bring Russia to heel for its aggression, Western countries have used their sway over the global financial system, unveiling more than 11,300 sanctions since the invasion and freezing some $300 billion of the country’s foreign reserves. At the same time, more than 1,000 companies, ranging from BP
(BP) to McDonald’s
(MCD) and Starbucks
(SBUX), have exited or curtailed operations in the country, citing opposition to the war and new logistical challenges.
Russia’s economic output duly contracted by 2.1% last year, according to a preliminary estimate from the government. But the hit was more limited than forecasters initially expected. When sanctions were first imposed, some economists predicted a contraction of 10% or 15%.
One reason for Russia’s unexpected pluck was its push toward self-sufficiency following Putin’s annexation of Crimea from Ukraine in 2014. Through a policy known as “Fortress Russia,” the government boosted domestic food production and policymakers forced banks to build up their reserves. That created a degree of “durability,” said Ash at Chatham House.
The swift intervention of Russia’s central bank, which jacked up interest rates to 20% after the invasion and implemented currency controls to buttress the ruble, was also a stabilizing force. So was the need for factories to increase production of military goods and replace items that had been imported from the West.
But the greatest support came from high energy prices and the world’s continued thirst for oil and other commodities.
Russia, the world’s second-largest exporter of crude, was able to send barrels that would have gone to Europe to countries like China and India. The European Union, which imported an average of 3.3 million barrels of Russian crude and oil products per day in 2021, was also still buying 2.3 million barrels per day as of November, according to the International Energy Agency (IEA).
“It’s a question of natural resources,” Sergey Aleksashenko, Russia’s former deputy minister of finance, said at an event last month hosted by the Center for Strategic and International Studies, a think tank. That meant the economy experienced a decline, but “not a collapse,” he added.
In fact, Russia’s average monthly oil export revenues rose by 24% last year to $18.1 billion, according to the IEA. Yet a repeat performance is unlikely, presaging increasingly tough decisions for Putin.
The price of a barrel of Urals crude, Russia’s main blend, fell to an average of $49.50 in January after Europe’s oil embargo — as well as a Group of Seven price cap — took effect. By comparison, the global benchmark stood around $82. That suggests that customers like India and China, seeing a smaller pool of interested buyers, are negotiating greater discounts. Russia’s 2023 budget is based on a Urals price of more than $70 per barrel.
Finding new buyers for processed oil products, which are also subject to new embargoes and price caps, won’t be easy either. China and India have their own network of refineries and prefer to buy crude, noted Ben McWilliams, an energy consultant at Bruegel.
Meanwhile, gas exports to Europe have plunged since Russia shut its Nord Stream 1 pipeline.
Russia’s government relied on the oil and gas sector for 45% of its budget in 2021. As it plans to maximize defense spending, lower revenues inevitably mean trade-offs. Spending plans for 2023 finalized in December involved a decrease in expenditure on housing and health care, as well as a category that includes public infrastructure.
“Whatever energy resources are obtained, they’ll be spent on military needs,” said Gulnaz Sharafutdinova, acting director of the Russia Institute at King’s College London.
The International Monetary Fund still expects Russia’s economy to expand by 0.3% this year and 2.1% the next. Yet any outlook is contingent on what happens in Ukraine.
“Whether the economy shrinks or expands in 2023 will be determined by developments in the war,” Tatiana Orlova, an economist at Oxford Economics, wrote in a note to clients on Tuesday. Shortages of workers tied to military conscription and emigration pose a key risk, she noted.
The impact of Western sanctions is poised to develop into a crisis over time. Bloomberg Economics estimates that Putin’s war in Ukraine will slash $190 billion off Russia’s gross domestic product by 2026 compared with the country’s prewar path.
Sectors that rely on imports have been particularly vulnerable. Domestic car makers such as Avtovaz, which manufactures the iconic Ladas, have struggled with shortages of key components and materials.
Russia’s auto industry was already weakened after companies such as Volkswagen
(VLKAF), Renault
(RNLSY), Ford
(F) and Nissan
(NSANF) halted production and began to sell their local assets last year. Chinese firms have stepped up their presence, part of a broader trend. Even so, sales of new cars dropped 63% year-over-year in January, according to the Association of European Businesses.
Across sectors, firms are struggling to plan for the future. A survey of more than 1,000 Russian businesses by the Stolypin Institute of Economic Growth in November found that almost half plan to maintain production over the next one to two years and aren’t thinking about growth. The group said this contributed to a high risk of “long-term stagnation of the Russian economy.”
Given Putin’s ideological commitment to subsuming Ukraine, he’s unlikely to back down, according to Sharafutdinova at King’s College London. But his war chest “is likely, inevitably, to diminish,” she added.
Prioritizing military spending will also come at a social cost, with a “slow and creeping” erosion of living standards, she added.
“In normal times, we might have said that the population would protest against that,” Sharafutdinova said. “But of course, these are not normal times.”
— Clare Sebastian and Olesya Dmitracova contributed reporting.
CNN
—
The past 12 months has forced European leaders to seriously rethink their approach to national security.
If Russia’s invasion of Ukraine has confirmed one thing, it’s that peace on the continent cannot be taken for granted. The status quo – decades of low spending and defense not being a policy priority – cannot continue.
This is especially true in Germany, which has for years has spent far less on its military than many of its Western allies but is now reconsidering its approach to defense at home and abroad.
Days after the invasion began last February, German Chancellor Olaf Scholz delivered a head-turning speech to parliament in which he committed to spending €100 billion ($108 billion) to modernize Germany’s military capacity.
He also vowed that Germany would lift its defense spending to 2% of GDP – meeting a target set by NATO that it had missed for years – and end its deep reliance on Russian energy, particularly gas.
However, nearly a year on, critics say Scholz’s vision has failed to become reality. And Germany has been accused of dragging its feet when it comes to sending its more powerful weapons to Ukraine.
The criticism has grown in recent days as US and European leaders have piled pressure on Berlin to send German-made Leopard 2 tanks to Ukraine, or at least allow other countries to do so.
Experts estimate there are around 2,000 Leopard tanks in use by 13 countries across Europe, and they are increasingly being seen as vital to Ukraine’s war effort as the conflict grinds into a second year. But Berlin must grant these nations approval to re-export German-made tanks to Ukraine, and it has so far resisted calls to do so.
Scholz has insisted that any such plan would need to be fully coordinated with the whole of the Western alliance, and German officials have indicated they won’t approve the transfer of Leopards unless the US also agrees to send some of its tanks to Kyiv.
On Friday, a key meeting of Western allies in Germany broke up without a wider agreement on sending tanks to Ukraine, after the country’s new defense minister Boris Pistorius said no decision had yet been made by his government.
Pistorius rebuffed claims that Germany has been “standing in the way” of a “united coalition” of countries in favor of the plan. “There are good reasons for the delivery and there are good reasons against it … all the pros and cons have to be weighed very carefully, and that assessment is explicitly shared by many allies,” he added.
Germany’s decision to dig in on sending tanks will likely go down badly with its allies, both in the immediate and long-term.
“It’s like acid eroding through layer after layer of trust,” a senior NATO diplomat told CNN on Friday. The diplomat added that Germany’s hesitance could also have a lasting impact on the rest of Europe and potentially push other members of the alliance closer towards the US, even if Germany is reluctant to do so.
And the divisions in the alliance have only grown more public in recent days – earlier in the week, Poland’s prime minister described Germany as “the least proactive country out of the group, to put it mildly,” and suggested his country might send Leopards to Ukraine without Berlin’s approval.
For all of the criticism of Germany’s hesitance on tanks, Berlin has played a crucial role in supporting Ukraine over the past year. The US and the UK are the only two countries to have delivered more military aid to Kyiv than Germany since the invasion began, according to the Kiel Institute.
Germany’s military support for Ukraine has evolved over time. It ditched its longstanding policy of not delivering lethal weapons to conflict zones and recently has stepped up deliveries of heavier equipment to Ukraine, including armored infantry fighting vehicles and Patriot missile defense systems.
The government, however, sees tanks as a massive step up from the weaponry it’s delivered to Ukraine so far, and fears that authorizing German tanks to be used against Russia would be seen by Moscow as a significant escalation.
Experts say the reticence is partly borne of Berlin’s pragmatic approach to conflict in general, and a relatively timid military posture going back decades, informed by what Scholz himself has described as “the dramatic consequences of two world wars that originated in Germany.”
“Germany has been on a peace-time footing for years. We don’t have the expertise in procedure or procurement to do anything at speed right now. The truth is that for decades, we have seen our defense budget as a gift to our allies because they thought it was important,” said Christian Mölling, deputy director at the German Council on Foreign Relations.
Whatever happens in Ukraine, Germany will have to ask itself some big questions about security in the coming years. The appetite to improve Germany’s armed forces has grown significantly since the start of the war.
Last week, Christine Lambrecht resigned as defense minister amid criticism of her efforts to modernize the military. Lambrecht had struggled to do anything of note with the €100bn that Scholz made available to her last year. The head of the Christian Democrats, the main opposition party in Germany, has accused the Chancellor of not taking his own speech last year seriously.
The person who now gets to spend that money is Pistorius, who German officials see as a safe pair of hands and up to the job. The question that he and Scholz must answer is how far Germany is willing to go in being a serious military presence in Europe.
In December, Germany admitted that it would not meet Scholz’s pledge to meet the NATO requirement on defense spending in 2022, and said it would likely miss the target again in 2023.
And its military’s combat readiness is inferior to that of some other European powers. According to the Rand cooperation, it would take Germany roughly a month to mobilise a fully-armored brigade, whereas the British army “should be able to sustain at least one armored brigade indefinitely.”
Defense experts say Germany will find it hard to move very far or very fast in its efforts to bolster its military.
“Yes, we have committed to spending more on our security, but without any clear idea of exactly what it should be spent on or how it fits into a broader security strategy,” Mölling said.
Mölling also believes that German’s defense ambitions could be hamstrung by political will: “Careers have been built on the narrative that Germany is a peace-loving nation. The public mood is shifting and possibly at a tipping point, but it would be very hard to be the leader that drove to make Germany a leading player in European security.”
European officials and diplomats are pessimistic and think that the reality of German politics means it will ultimately continue resisting serious reform on defense.
It is often said in diplomatic circles that Germany’s 21st century model for success has been built on three pillars: cheap Chinese labor, cheap Russian energy, and American guarantees of security.
Many believe this well-known preference for diplomatic pragmatism and subsequent reluctance to pick sides will mean any defense reforms will be severely limited.
One German official told CNN that it will be hard for mainstream politicians to break free from old habits: “They have an inherent skepticism against siding overtly with the USA and a subtle hope that the relationship with Russia can be fixed.”
Berlin has also lent its support to Ukraine in other ways, taking action to wean itself off of Russian gas and setting an example for rest of Europe, which has seen its overall consumption of gas go down since the the start of the war. Europe’s relatively warm winter has of course helped, but stopping Putin from weaponizing energy has been an important factor in the Western pushback on Moscow.
But the security map of Europe has been redrawn, as have the dividing lines in the international diplomacy. Russia’s unprovoked invasion of another country has demonstrated more clearly than ever that moral values are not universal.
Germany, Europe’s wealthiest country, has undeniably benefited enormously from its policy of keeping feet in two camps. It is protected by NATO membership while maintaining economic relations with undesirable partners.
That policy has been called out and Germany must now decide exactly what kind of voice it wants to have in the current conversation taking place about global security. The decisions it takes in the next few years could play a crucial role defining the security of the entire European continent for decades to come.
CNN
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The House is expected to vote Monday evening on the rules package for the 118th Congress, in what will mark the first test of House Speaker Kevin McCarthy’s slim Republican majority after he made key concessions to GOP hardliners to win the gavel.
McCarthy’s concessions to the hardliners alienated some centrist House Republicans, and GOP leaders were racing Monday to alleviate those concerns. Sources told CNN that GOP leaders placed numerous calls and texts to Rep. Nancy Mace of South Carolina, who said Sunday she was “on the fence” over the House rules package.
McCarthy’s allies have been fanning the airwaves to try to clarify what is and isn’t in the rules package, particularly as it relates to defense spending.
Republican leadership is still confident they will have the votes for the rules package, but with such little margin for error – and this vote seen as McCarthy’s first test of whether he can govern – leaders are leaving little to chance.
GOP leaders are hoping to quickly push past the rules and onto their legislative agenda, with a vote slated for Monday evening after the rules on a bill to roll back $80 billion funding to staff up the Internal Revenue Service that was included in the Inflation Reduction Act, a massive social spending bill passed by Democrats in the last Congress.
Still, the skirmish over the House rules underscores the herculean task McCarthy faces as the leader of a House with a slim four-vote Republican majority that gives a small bloc of members on either side of the Republican political spectrum outsized sway to stand in the way of legislation.
In order to flip the 20 GOP holdouts last week, McCarthy agreed to a number of concessions. That included returning the House rules so that one member can move for a vote to oust the speaker. The California Republican agreed to expand the mandate of a new select committee investigating the “weaponization” of the federal government to include probing “ongoing criminal investigations,” setting up a showdown with the Biden administration and law enforcement agencies over their criminal probes, particularly those into former President Donald Trump.
McCarthy also signed off on a pledge that the Republican-led House would pair any debt ceiling increase to spending cuts and would approve a budget capping discretionary spending at fiscal 2022 levels – which, if implemented, would roll back the fiscal 2023 spending increase for both defense and non-defense spending from last month’s $1.7 trillion omnibus package.
Texas Rep. Tony Gonzalez was the first Republican to oppose the House rules on Friday. He said on Fox News Monday morning that he remained a no.
“I’m against the rules for a couple different reasons. One is the cut in defense spending, I think that’s an absolutely terrible idea, the other is the vacate the chair. I mean I don’t want to see us every two months be in lockdown,” Gonzalez said.
Mace said on CBS’ “Face the Nation” she was still “on the fence” about the rules package because she didn’t support “a small number of people trying to get a deal done or deals done for themselves in private.”
Republicans expected to back the rules package are also coming to grips with the concessions that McCarthy had to make to secure the speakership.
Rep. David Joyce, a moderate Ohio Republican, told CNN that McCarthy should be concerned that a single member can force that vote of no-confidence on the speakership.
“I’m not the speaker. So it concerns Kevin more than it concerns me, but that just took it back the way it was originally. And I don’t think that is going to change the way we do business around here,” he said, adding it should only be used in the most extreme of circumstances.
Asked if everyone agrees with that, Joyce told CNN: “Probably not.”
Rep. Tom Cole, the chairman of the House Rules Committee, told CNN: “I’m willing to cut spending and we need to do that. I’m not willing to cut defense and that is half the discretionary budget.”
Republican allies of McCarthy have sought to push back on the notion they will cut defense spending, saying it’s domestic spending that will be targeted.
“There’s going to be good conversations, there already has been, that you can’t cut defense, right? It needs to go on a very predictable trajectory,” said Rep. Dan Crenshaw, a Texas Republican. “We have massively increased spending on the non-defense programs, because that’s always the deal, right? There’s plenty to work with there, in my opinion.”
House GOP leaders are planning to hold votes this week on a bevy of red-meat messaging bills on taxes, abortion and energy, starting with Monday’s vote to roll back the IRS funding increases.
The bill is likely to pass the House on party lines but won’t be taken up by the Democratic-majority Senate.
CNN
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Lawmakers on Capitol Hill are scrambling to try to fund the government and pass a sweeping defense policy bill before a new Congress is sworn in, but there are signs that both sides have struggled to reach agreement over these key outstanding issues.
Government funding expires at the end of next week on December 16 – and it appears all but certain that lawmakers will have to pass a short-term extension as they try to reach a broader full-year funding agreement.
Separately, the House has been expected to take up the National Defense Authorization bill for fiscal year 2023 this week, but it’s not yet clear when a vote will take place amid questions over whether certain controversial policy provisions will be included in the legislation – like eliminating a Covid-19 vaccine mandate for the military. Once the House has passed the bill, it would next have be taken up by the Senate.
Senate GOP leader Mitch McConnell warned on Tuesday that rather than passing a full-year funding bill, lawmakers may have to pass a short-term stop-gap measure to kick the can into early next year. This would set up a huge funding fight and create fears of a government shutdown early in the new Congress, when Republicans will take control of the House and would have to cut a deal with Democrats who run the Senate.
On government funding legislation, McConnell said: “We don’t have agreement to do virtually anything, which can only leave us with the option of a short-term CR into early next year,” referring to a short-term bill known as a continuing resolution.
He added: “We don’t even have an overall agreement on how much we’re going to spend, and we’re running out of time.”
Despite the threat of a stop-gap, Senate Majority Leader Chuck Schumer reiterated on Tuesday that senators are “working very hard” to reach a deal to fully fund the government before the upcoming deadline, but acknowledged that “there’s a lot of negotiating left to do.”
Senate Republican Whip John Thune signaled Tuesday that he doesn’t have a “high level of confidence” both parties will be able to reach a deal on an omnibus government funding bill, as time is running short to pass that massive bill.
“I don’t have a high level of confidence because I’m looking at the calendar,” the South Dakota Republican said. “It’ll be a very heavy lift, but who knows? I guess I would say is, you know, bring your Yuletide carols and all that stuff here because we may be singing to each other.”
McConnell complained Tuesday that Democrats were preventing quick passage of the National Defense Authorization Act by trying to add unrelated items at the last minute that Republicans oppose.
“Senate Democrats are still obstructing efforts to close out the NDAA by trying to jam in unrelated items with no relationship whatsoever to defense. We’re talking about a grab bag of miscellaneous pet priorities,” McConnell said in remarks on the Senate floor.
“My colleagues across the aisle need to cut their unrelated hostage taking and put a bipartisan NDAA on the floor,” he added.
Lawmakers released text of an agreement for the NDAA Tuesday night.
The summary, released by the Senate Armed Services Committee, said it “requires the Secretary of Defense to rescind the mandate that members of the Armed Forces be vaccinated against COVID-19.”
CNN reported earlier this week that the mandate was likely to be rescinded as part of the defense policy bill.
In a tweeted statement Tuesday night, House GOP leader Kevin McCarthy said that “the end of President Biden’s military COVID vaccine mandate is a victory for our military and for common sense.”
House Majority Leader Steny Hoyer, a Maryland Democrat, said earlier Tuesday that the House was considering eliminating the Covid-19 vaccine mandate for military members in order to gather enough Republican votes to pass the annual defense authorization. Republicans have said they will not support the NDAA with the vaccine mandate in place.
Hoyer said at his weekly pen and pad with reporters that Democrats were not “willing” to give up the mandate, but that a compromise is required to get the NDAA across the finish line.
“We’re not willing to give it up. This is not a question of will; it’s a question of how can we get something done? We have a very close vote in the Senate, very close vote in the House. And you just don’t get everything you want,” he said.
Thune said of the defense policy bill, “I think the ransom the Democrats wanted for stripping the vaccine mandate is a whole bunch of things to include the permitting reform, but also some other things that are just going to be non-starters on our side, and I don’t think we’re going to get in the business of, you know, allowing them to hold us hostage.”
This story has been updated with additional developments.