Foreign Affairs

While the trade war between China and the United States has hogged headlines and driven market anxieties over the past year, an equally large threat to the global economy has gotten little attention: a looming tax war. Since the early twentieth century, countries have largely agreed on how to tax income earned by multinational corporations that conduct business across borders. But this long-standing regime is coming apart, imperiling the broader international economic order.

The current system, established through decades of practice and convention, provides a basis for determining which country can tax income earned in one jurisdiction by a business that resides in another. The regime rests on the norms set in domestic tax laws as well as a patchwork of almost 4,000 bilateral treaties. For decades, the system was stable and functional enough that no one other than international tax lawyers even talked about it.

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On October 14, Spain’s Supreme Court sentenced several leaders of the Catalonian separatist movement to lengthy prison terms for their role in organizing a controversial independence referendum two years ago. What followed seemed, in some ways, like a tragic replay of the failed 2017 secession bid: protests erupted in Barcelona, some descending into vandalism; riot police manhandled peaceful protesters; and Catalonia was left without a clear path to resolving its differences with the central government.

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As China’s rise has become a central force in global politics, analysts and policymakers have tracked its path to potential preeminence on a number of fronts: the size of its economy, the scale and reach of its investment and commercial relationships, the budget and capabilities of its military forces. But as of 2019, China has surpassed the United States in an underappreciated but crucial measure of global influence: the size of its diplomatic network.

For decades, Washington had the largest diplomatic network in the world. Now China does, boasting 276 diplomatic posts—including embassies, consulates, and permanent missions to international organizations. The United States’ network, meanwhile, stands at 273, down one post since 2017.

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A congressional impeachment inquiry seeks to determine whether U.S. President Donald Trump extorted a foreign leader, withholding a coveted White House meeting and U.S. military aid in order to promulgate a Russian-inspired conspiracy theory and smear his chief opponent in the 2020 election. The United States’ gravest constitutional crisis since Watergate is not just about preserving the integrity of U.S. democratic institutions from the president’s abuse of power, however. It is an episode in a broader geopolitical struggle between the defenders of democracy and the forces of oligarchic authoritarianism, from Kyiv’s Maidan to Hong Kong’s Mong Kok. In this wider global conflict, Trump and his surrogates have consistently aligned themselves with the forces of oligarchic authoritarianism—in Russia, Turkey, Hungary, and other countries, too. Nowhere is this clearer than in Ukraine.

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What if an election is held and no one votes? This question now confronts Algeria, where the government of interim President Abdelkader Bensalah has scheduled a presidential election for December 12. Yet the election risks ending as an exercise in absurdity: nearly all Algerian political and civil organizations have refused to endorse the five official candidates and have called upon Algerians to refrain from voting. The failure of this election will, paradoxically, mark the success of the country’s democratic aspirations, as expressed through a phenomenon that has dominated the Algerian political landscape since late February: le hirak.

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By far the most important foreign policy story of our time is the way Washington has refocused its attention on great-power competition. 

Engagement with a rising China has been far more successful than generally recognized, and it continues to be the best path forward in an age of great-power competition. 

Presidential impeachment in the United States has always seemed to be a domestic matter. President Bill Clinton was impeached for lying about sexual misconduct. President Richard Nixon resigned to avoid certain impeachment in the wake of the Watergate scandal. And in 1868, the House of Representatives leveled 11 articles of impeachment against President Andrew Johnson for defying a Republican-led Congress and its positions on Reconstruction.

The current inquiry into President Donald Trump is different. Sometime in December, it is likely that a U.S. president will for the first time be impeached for misusing his foreign policy authority in the service of personal political interests. The evidence laid out in House Intelligence Committee hearings establishes that Trump conditioned the release of congressionally authorized military aid to Ukraine on an announcement by the Ukrainian government that it would conduct investigations of Trump’s political opponent, former Vice President Joe Biden, and of the baseless allegation that Ukraine, not Russia, interfered in the 2016 U.S. presidential election.

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For three weeks in October, hundreds of Catholic bishops and priests mostly from the countries of the Amazon River basin convened at a special synod at the Holy See. The meeting signaled Pope Francis’s deep concern for the indigenous peoples of the South American rainforest. In his own words, the pope sought “drastic measures” to avert further harm to these communities. “Every kind of injustice and destruction,” he said, “has been practiced upon these people.” Francis knew this synod would upset some traditional believers who have little patience for his moral investment in the protection of indigenous groups. Although his opponents created audacious distractions, the pope persevered in advancing an agenda that facilitates concrete gains for officials, activists, and community leaders dedicated to saving the Amazon.

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Thirty years ago this month, the opening of the Berlin Wall ushered in the last great diplomatic struggle of the Cold War. As cheering crowds danced atop what was left of the Iron Curtain, the fate of Germany hung in the balance. In retrospect, it is easy to see that triumphal moment as part of an inevitable march toward German reunification. At the time, however, the future felt anything but certain. 

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In the absence of a magic potion for development, the best way for a country to profoundly transform millions of lives is not to try in vain to boost growth. It is to attempt to raise living standards with the resources it already has.

Since the end of the Cold War, every U.S. president has come into office promising to build better relations with Russia—and each one has watched that vision evaporate. The first three—Bill Clinton, George W. Bush, and Barack Obama—set out to integrate Russia into the Euro-Atlantic community and make it a partner in building a global liberal order. Each left office with relations in worse shape than he found them, and with Russia growing ever more distant.

President Donald Trump pledged to establish a close partnership with Vladimir Putin. Yet his administration has only toughened the more confrontational approach that the Obama administration adopted after Russia’s aggression against Ukraine in 2014. Russia remains entrenched in Ukraine, is opposing the United States in Europe and the Middle East with increasing brazenness, and continues to interfere in U.S. elections. As relations have soured, the risk of a military conflict has grown.

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The story of how the Tunisian revolution began is well known. On December 17, 2010, a 26-year-old fruit vendor named Mohamed Bouazizi from the town of Sidi Bouzid set himself on fire outside a local government building. The man’s self-immolation—an act of protest against repeated mistreatment by police and local officials—sparked protests that quickly spread across the country. Within a few weeks, President Zine el-Abidine Ben Ali had stepped down and fled the country after 23 years in power, offering Tunisia an unprecedented opportunity for a democratic opening. A massive wave of uprisings soon swept the country’s neighbors, reaching all the way to the Levant and the Persian Gulf. 

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The Western Hemisphere faces a migration crisis on a scale similar to the European crisis of 2015, with consequences just as far-reaching.

The United States is in its 11th year of uninterrupted economic expansion, unemployment has hit a historic low, and growth, while decelerating, still hums along. Yet anxiety about the next recession seems to mount with each new tariff or tweet that President Donald Trump lobs at China as part of his trade war—and for good reason. The president’s policies are clearly hurting tradeable sectors of the U.S. economy, especially manufacturing, which must contend with the double whammy of U.S. tariffs on imported inputs and Chinese tariffs on exports of finished goods. U.S. producers of vehicles, electronics, and agricultural goods, among other things, are all scrambling to disentangle their supply chains from China. But doing so is costly and complicated, and many of them are suffering as a result.   

At the end of May, Prime Minister Benjamin Netanyahu shocked Israel by calling for new national elections after he failed to form a governing coalition. Commentators dubbed the unprecedented new poll “Mo’ed B,” literally, a second scheduled date. The term also implies a second chance at success.

Despite failing to win a majority in the April elections, Israeli opposition parties of the center and the left didn’t seem to want a re-run; most of their lawmakers voted against the new elections. Ironically, it was the right-wing parties, who won a comfortable 65 seats (out of a total of 120), that voted themselves out of office. They clearly think they can do better. They may be right.

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Asia’s two largest and most diverse democracies held national elections in recent weeks, and religious tolerance was on the ballot in both. Voters, however, delivered diametrically opposed verdicts. 

In Indonesia, the government of incumbent President Joko Widodo (widely known as Jokowi) won by broadcasting a message of pluralism. Jokowi preached an inclusive nationalism that transcended Islam, Indonesia’s dominant religion, and won reelection by a decisive margin. 

In India, victory also went to the incumbent, Prime Minister Narendra Modi, but on very different terms. Modi, who heads the Hindu nationalist Bharatiya Janata Party (BJP), won in large measure by invoking his party’s vision of an India of and for the Hindus.

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On April 30, leaders of the Venezuelan opposition, among them National Assembly Chair and self-proclaimed interim President Juan Guaidó, gathered before dawn on a three-lane highway in Caracas to proclaim the start of “Operation Freedom,” an uprising to liberate Venezuela. Liberation, however, proved fleeting. A smattering of supposedly mutinous secret policemen had gathered for the uprising, yet within two hours of its proclamation, they had piled into their vehicles and sped off. As one opposition member present at the time later recalled, “It was over before it began.”

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We need a foreign policy that focuses on core U.S. interests, clarifies our commitment to democratic values both at home and abroad, and that privileges diplomacy and working collectively with allies to address shared security concerns.

A month after American and Chinese negotiators failed to seal what was supposed to be a “slam dunk” of a trade deal, observers on both sides of the Pacific are still scratching their heads over what went wrong. But in Washington and Beijing, leaders already appear to be gearing up for a longer-term struggle, making a true deal—one that resets rapidly deteriorating bilateral ties—increasingly elusive.

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