Signal: Xi and Zuck speak — Trump and Syria — Spaghetti Western Orban

Hi LinkedIn,

If you like what you see, be sure to sign up for Signal to receive it in your inbox first thing every Tuesday and Friday morning.

-Ian

---

ZUCKERBERG AND XI AT THE MIC

Today brings important statements from the most powerful man on earth and the most powerful man on the internet. Each, in his own way, is a visionary sort of authoritarian. Neither is especially well liked by the US government at the moment.

First, Chinese President Xi Jinping delivered a keynote several hours ago at the Bo’ao Forum, a gathering of investors and global leaders that is China’s (tropical) answer to Davos.

Amid rising jitters about a US-China trade war, Mr. Xi struck something of a tactical retreat. He pledged explicitly to lower barriers to the Chinese auto sector — subject of a weekend outburst by Trump — and promised fresh movement on earlier plans to open China’s potentially lucrative financial services sector to foreign investment.

At the same time, Mr. Xi criticized the emergence of “zero-sum” trade policies and stressed the need for dialogue rather than threats. The ball (probably made in Thailand, rather than China, to be fair) is now back in Trump’s court.

But Mr. Xi remains at pains to paint a credible picture of China as a defender of free trade. China opposes tariffs on goods, sure — but the government’s expansive subsidies, low regard for IP rights, and generally high non-tariff barriers to investment are still acute problems for many of China’s trade and investment partners. On that score, Xi said little about changing his country’s signature industrial policy, the Made in China 2025 initiative, meaning that China’s strategic approach remains largely the same.

Later today, meanwhile, Facebook CEO Mark Zuckerberg will testify before Congress about two things: his company’s failure to protect users’ private data, and the ways that Facebook unwittingly facilitated efforts to meddle in the 2016 US presidential election.

He’ll contritely detail what Facebook is doing to address these problems. His main challenge is to be transparent enough to satisfy lawmakers (and shareholders) that he can fix things, but without giving Congress any bright ideas about tighter regulation. Facebook is already facing a big regulatory hit in Europe, where privacy laws are much tougher.

For now, most in Congress still see tighter regulation as a threat to innovation and free speech. But amid growing concern about social media’s negative impact on social cohesion, that can’t be taken for granted any more, and Zuckerberg knows it.

Xi and Zuckerberg are, in a sense, both making tactical feints in order to avoid more significant reforms to business models that have served them well. How long will their audiences buy it?

GRAPHIC TRUTH: GOT MY ARMS AROUND THE WHOLE WORLD

Arms exports are an important way for countries to spread their influence globally while also supporting what are often important domestic industries. For decades, the world’s largest arms exporters have been the United States and Russia (though China has increased its profile markedly over the past 15 years.) Here’s who’s buying from the two arms industry juggernauts.

ORBAN GETS TWO THIRDS OF THE WAY TO ILLIBERALSVILLE

Hungary’s Prime Minister Viktor Orban, whose “illiberal” political project we told you about last week, achieved a resounding victory over the weekend, with his Fidesz party winning a two-thirds supermajority in parliamentary elections.

That two-thirds threshold is critical, because it means that Orban is now in a position to make changes to Hungary’s constitution that could pitch the country more decisively in an authoritarian direction. Expect to see changes to assert more control over the courts and civil society.

All of this means that Budapest and Brussels are set for a big showdown sooner rather than later. Orban has already refused to comply with EU policies on accepting a small number of humanitarian refugees from North Africa and Syria. His constitutional changes will clash more openly with EU rule of law and civil society norms.

What’s Brussels to do? Nothing is one option. But that would undermine the authority of EU rules that every member state willingly signed up for when they joined the union. Brussels can, instead, propose internal sanctions on Budapest that would suspend voting rights and other privileges — but those require unanimity among all EU member states which Poland’s government, which is ideologically aligned with Orban’s, would scuttle.

There is, of course, the prospect of the EU cutting its lavish funding for Hungary. That money has helped to fuel the country’s recent economic boom and enabled Orban to throw money at important rural constituencies. Whether such action would chasten or inflame Mr. Orban’s illiberal impulses is a critical open question for Europe.

WHAT’S ILLIBERAL DEMOCRACY?

Prime Minister Orban in 2014 said that he wants to build an “illiberal state” and that “a democracy is not necessarily liberal.” Can a democracy be illiberal?

Here is one way to think about it: liberalism, in the political sense, is a philosophy that stresses the protection of individual rights and the rule of law, no matter who is in power. It involves checks and balances for government, and certain safeguards for civil society and the media. (This is different than economic liberalism which espouses free markets, or socialliberalism which advocates progressivism.)

Meanwhile democracy, in this context, is just a way of putting people in power and holding them to account. The people freely choose their leaders by majority or plurality vote, and they can freely boot them out if they like.

The thorny bit is this: democracies can elect leaders who can, perfectly legally and democratically, erode the protections of liberalism. Even if elections are regularly held, they lose their primary function of being a tool for accountability.

That’s what’s happening in Hungary today.

GZERO World With Ian Bremmer: Haasstile Actors

RED LINES (AGAIN) AND BEYOND

US President Donald Trump has promised to respond to the Syrian regime’s alleged use of chemical weapons on the town of Douma. His immediate challenge is to do so in a way that demonstrates US resolve to, well, respond, but which doesn’t risk opening up a more direct conflict with Russia or Iran, both of which now have troops and advisers embedded throughout the country.

But beyond the narrow question of if and how to respond to the chemical attack hangs the broader question of whether the US intends to stay in Syria and if so, under what pretext. Trump has signaled he wants out, though the Pentagon has evidently persuaded him to stay a while longer. Broadly speaking there are three possible objectives for staying:

To fight ISIS, in eastern Syria, where American forces have worked with Kurdish and Arab militias to all but eliminate the self-styled caliphate’s territorial reach. Leaving could allow ISIS to regroup, but as my pal Willis notes, what’s the harm in letting Iran and Russia deal with that problem if they want ownership over the postwar outcome?

To stop Russia and Iran from establishing Syria as a postwar client state. This is not a feasible objective given the relatively limited US presence. Russia, Iran, and Turkey — which are more involved — are already leading their own peace process without the US. Absent a significant increase in US troops, which the American public — including but not limited to Trump’s base — would never support, this isn’t a realistic goal.

To prevent humanitarian catastrophe and war crimes. Trump’s retaliation against Syria for chemical attacks certainly imposes some limited costs on the Assad regime, but are they enough to deter their future use? It was (exactly) a year ago that Trump hit Syria with 59 cruise missiles in response to a chemical attack. And yet the use of chemical weapons has continued, right through the Douma attack.

FORMER PRESIDENTS BEHIND BARS

Last weekend was, on the face of it, a good one for anti-corruption crusaders and a bad one for former presidents.

South Korea’s former President Park Geun-hye was sentenced to 24 years on corruption charges, Brazil’s former President Lula began serving 12 years for his own graft conviction, and ousted South African President Jacob Zumaappeared in court to face the first of what could be a long series of corruption charges.

So far so good. The high and mighty were held to account. A win for the rule of law at a time when corruption is an increasingly important focus for voters across the world. But rooting out corruption isn’t just about high-profile prosecutions. There are outstanding challenges that lie ahead in the battle against graft in each of these countries.

In Brazil, the country is deeply polarized over whether the conviction and jailing of the left-wing Lula represents a win for impunity (no one is above the law) or a hit to impartiality (his supporters note that plenty of centrist politicians are still free despite corruption allegations of their own.)

In South Korea, the culture of corruption that exists between the government and the powerful, family run conglomerates known as chaebol runs deep. (If you’re reading this on a Samsung and/or riding in a Hyundai, you are in direct contact with a chaebol.) After all, with Ms. Park’s conviction, all four of South Korea’s living former presidents — going back to the 1990s — are either being tried or punished for corruption. It’s not easy to slip the influence of these powerful companies, of which the 10 largest control more than 27 percent of all business assets in South Korea. Will Ms. Park’s fate change that?

In South Africa, Jacob Zuma’s being hauled into court is also, potentially, a win for the rule of law. But it remains to be seen how far his prosecution goes and whether, crucially, it sheds a broader light on the endemic corruption that has contributed to South Africa’s unenviable status as the world’s most unequal society. This is a critical question as the country heads for pivotal elections next fall, in which Mr. Zuma’s successor, Cyril Ramaphosa, has pledged to clean up the ANC.

HARD NUMBERS

70: Next week Raul Castro will step down as president of Cuba. Some 70 percent of the Cuban population has never known a Cuba led by anyone other than a Castro. Without the dynastic and revolutionary mystique of the Castro family, can the incoming president, Miguel Diaz-Canel, establish his authority and meet the expectations of Cuba’s people?

63: When the Syrian regime used chemical weapons against the village of Khan Sheikhoun last April, President Trump responded with a volley of cruise missiles as punishment just 63 hours later. At the moment, the clock is ticking on his response to the alleged chemical attack on the village of Douma over the weekend. Trump said on Monday he’d decide in 24 to 48 hours.

38: Latin America suffered 38 percent of the world’s criminal homicides last year, despite accounting for just 8 percent of the world’s population. Rapid urbanization, corruption, drug trafficking, and a huge influx of US guns all contribute.

25: Some 25 percent of soybeans in Iowa, always a critical swing state in presidential elections, end up in China, meaning that Iowa’s farmers are being kept afloat in part by China’s growing middle class. If a trade war hits those exports, Trump’s road to re-election in 2020 could get a lot rougher.

15: Freshly re-elected Hungarian Prime Minister Viktor Orban’s secret pleasure is spaghetti westerns, according to a new biography. He claims to have seen Once Upon A Time in the West — which concludes with Charles Bronson gunning down villain Henry Fonda and cramming a harmonica into his mouth — fifteen times. With the EU set to respond to Hungary’s political deterioration, Orban’s got a harmonica or two in store for Brussels.

This edition of Signal was written by Alex Kliment (@saosasha) and prepared with editorial support from Kevin Allison (@KevinAllison), Leon Levy (@leonmlevy) and Gabe Lipton (@Gflipton). Spiritual counsel from Willis Sparks.

If you like what you see, be sure to sign up to receive it in your inbox first thing every Tuesday and Friday morning: eurasiagroup.net/signal.