Obama recently signed the Trade Facilitation and Trade Enforcement Act, a broad refresh of US trade laws. Title VII concerns exchange rate and economic policies. The earlier law from 1988 required the Treasury to determine if a nation was manipulating its exchange rate. In reality, being designated a manipulator didn’t trigger significant penalties. In this report, we discuss the history of exchange rate issues in trade, the new legislation and its potential impact on US trading partners. We review the reserve currency role and explain why this role almost precludes any effective trade policy designed to punish foreign trade practices, reflecting on the new law in light of the current political situation in the US.

Last week, we described in some detail the process of “monetary funded fiscal spending” (MFFS). Part 1 of this series included a discussion of why MFFS might be implemented, how it would work and the potential problems that come with using it. In this week’s report, we will examine two historical examples where forms of MFFS were implemented, Japan in the 1930s and the U.S. during WWII. Next week, we will conclude the final report of the series with market ramifications.

On February 26, Iran held two elections, one for parliament and the other for the Council of Experts. The former is Iran’s legislative body, and the latter is the part of government that monitors the Supreme Leader and selects his replacement if he dies, becomes incapacitated or is removed. Since the 1979 revolution, Iran has not held these two elections simultaneously. The results favored moderate candidates and rejected the most hardline factions. In this report, we discuss the structure of the Iranian government, examine the results of the elections and analyze their impact.

Over the past year, Russia has faced a growing number of challenges that have the potential to weaken President Putin’s hold on the reins of power. In this report, we will discuss recent trends in the country, including the economic problems caused by falling oil prices and the military operations occurring in Ukraine and Syria. We will examine the Putin government’s responses to these issues. As always, we will conclude with market ramifications.

Last week, we wrote our first formal book review as a Weekly Geopolitical Report. The book, Superpower: Three Choices for America’s Role in the World, is a recently published book by Ian Bremmer in which he discusses three models for American foreign policy. In our closing comments last week, we promised to take a deeper look at Bremmer’s foreign policy models to examine their costs and benefits. In this report, we analyze his three models of exercising the superpower role, Indispensable America, Independent America and Moneyball America, and discuss which model is the most likely choice.

On April 2, the P5+1 and Iran announced a framework to deal with Iran’s nuclear program. The framework is a roadmap to establishing a final agreement in June and could be a major step toward delaying Iran’s entry into the “nuclear club.” This report begins with a short history of Iran’s nuclear program. Next, we review the details of the framework and address the broader policy issues surrounding Iran’s nuclear program. An analysis of the real issue, regional hegemony, follows along with a review of the political factors of the deal. We conclude with the potential market effects.

The final installment of our series examines how, in light of winning the Cold War, policymakers have been unable to settle on a set of key priorities and offers glimpses of a new policy emerging. The US never wanted to be a superpower; its founding story is one of wresting independence away from a colonial power. Now that the existential threat of communism is over, the political class has struggled to create a foreign policy that can simultaneously provide the required hegemonic global public goods and create a working economic policy and political coalition that will build domestic harmony.

In the second installment of our four-part series we focus on two themes. First, we examine the global public goods the superpower provides, and second, we analyze how the U.S. has done so. The global hegemon often faces tensions between the desires of domestic constituencies and its foreign obligations. Every superpower negotiates these pressures and each tends to have its own ways of meeting both objectives. However, no superpower can subjugate the goals and aspirations of its citizens indefinitely. If the cost of hegemony becomes too high, a nation may be unable to maintain the position.

We have focused for several years on the issue of the uncertainty surrounding America’s superpower role. It has been our position that the U.S. has lacked a coherent foreign policy since the Cold War ended in the early 1990s. Although we cannot definitely say that a new policy is in place, the trappings of one appear to be emerging. The focus of this paper is how policy seems to be evolving and why. This will be a four-part report. Part I begins with the evolution of U.S. foreign policy, focusing on the 25-year cycle pattern between the adaptations to new circumstances.

This report is an update to a similarly titled piece we published in 2013. In this report, we delve further into what appears to be an evolving policy change by the U.S. with Iran, discussing the basic goals of the U.S. and Iran. With this background, we examine America’s alternatives to achieving our aims in the region, followed by a full examination of U.S. difficulties in making a historic policy change with Iran. We discuss the recent policy pattern in the region and how it supports the notion that improving relations with Iran is probably the reason for this pattern.

After the Syriza party won 149 of the 300 seats in the Jan. 24th Greek elections, European markets have been roiled by worries over another crisis developing. In this report, we use game theory to describe the situation between Greece and the EU/Germany/ECB. This method shows how misunderstandings can develop and how catastrophic mistakes are made. Using this structure, we will outline the positions and perceptions of both sides and describe how this situation could lead to another crisis. As always, we will finish with market ramifications.

King Abdullah of Saudi Arabia was recently hospitalized with pneumonia. In light of his advanced age and declining health, an analysis of royal succession in Saudi Arabia is in order. We will begin with a history of Saudi kings and follow with an examination of the current Saudi succession, focusing on the Crown Prince and who remains as potential kings among the ?second generation? of the Saudi Royal Family. We will analyze the challenges facing the kingdom and how the succession issue will likely complicate the way these issues are resolved, and conclude with potential market ram

In our 2015 Geopolitical Outlook, one of the risks we discussed was the rise of populism. In this week?s report, we will focus on European populism. The recent attack on the employees of Charlie Hebdo in France makes this a timely topic. In this report, we will define populism, examine why populism has developed in the West, note the particular characteristics of European populism and identify the effects it could have on general geopolitics in the future. As always, we will conclude with potential market ramifications.

On December 17, 2014, President Obama surprised the country by announcing a prisoner exchange and negotiations to begin establishing diplomatic relations with Cuba. Given that the Eisenhower administration broke off diplomatic relations with Cuba in January 1961, even considering resuming relations is a major change in policy. In this report, we will discuss the importance of Cuba to the geopolitics of the U.S and offer a short history. We will analyze the limits of the current thaw and why this attempt at rapprochement is occurring now. As always, we will conclude with market ramifications.

Last week, we began our two-part series on the fall of the Berlin Wall with an examination of the end of Marxism. In this report, we will examine the rest of the important consequences from the fall of the Berlin Wall. These are: the Collapse of the U.S.S.R., the Onset of the U.S. Unipolar Moment, and the Impact of German Unification. We will conclude our comments with potential market ramifications.

Economic problems in the Eurozone continue to periodically emerge. Complicating matters significantly is German opposition to fiscal and monetary stimulus measures. We believe the experience after WWII and the Wirtschaftswunder (economic miracle) that lasted into the early 1960s has played a large role in shaping current German policy. This week we discuss German history with a focus on how German leaders shaped the economy and rebuilt the nation after the war, paying particular attention to the economic model and how the Merkel government is trying to impose that model on the entire Eurozone.

Very few countries have seen as spectacular of a decline in its economic standing over the past 100 years as Argentina has. Argentina has been in the international headlines recently due to its sovereign debt default, the eighth default in the history of the country. This week we will look at Argentina, its long history of economic booms and busts, its political background, and its extensive chronicle of sovereign debt defaults. As always, we will conclude with market ramifications.

During the first round of Brazilian presidential elections on October 5, the incumbent Dilma Rousseff received 42% of the votes while Aecio Neves received 34%. Since neither candidate received more than 50% of the vote, the second round of runoff elections will be held on October 26. This week, we will look at the Brazilian presidential elections along with the countrys current political and economic environment. We will briefly describe the recent political history of the country and look at the specifics of Brazils economic development. As usual, we will conclude with market ra

On November 9, the Catalonia region of Spain is due to hold a referendum for independence. This week, we will look at the separatist movement in Catalonia. We will start by giving a brief overview of the regions history and politics, then look at the roots of the independence movement. We will explore the probability of independence, the potential future relationship between the region and the central government, and the role of the EU and the Eurozone. As always, we will conclude with market ramifications.

Last week marked six months since the Ebola outbreak was identified in Guinea. The current Ebola epidemic is the most severe and most complex outbreak of the disease in the history of the virus. This week, we will explore the Ebola outbreak, looking at the origin of the disease and how it has spread and developed into a serious epidemic. Although it is hard to find comparable epidemics due to its complexities, we will look at other disease outbreaks in order to gain a better understanding of the scale of the current Ebola epidemic. We will finish with geopolitical and market ramifications.

President Obama has decided to build a coalition to dislodge the Islamic State (IS). The U.S. is leading the coalition, but American efforts will be limited to air power. In this report, we will offer a short synopsis of the war plan. This analysis will be followed by a broader discussion of U.S. Middle East strategy, including a history of American policy. We will move to discuss the most likely outcome from these efforts and conclude, as always, with market ramifications.

The recent presidential election in Indonesia has attracted international interest as both candidates platforms included promises of import substitutions, export restrictions and retention of production processes in Indonesia. Although Indonesia holds substantial growth promise for foreign investors, the potential trade restrictions are making international companies nervous. This report discusses Indonesia, briefly describing its history, economy and political landscape. It delves into the election, promises made on the campaign trail and the implications of the results on foreign inve

Since taking power, Chinese President Xi Jinping has implemented a strong program to punish corruption. A large number of the Communist Party of China (CPC) have been under investigation or punished for their failings. We believe these purges are being implemented for reasons beyond the simple exercise in political power. This report will discuss the purge in detail, introduce the concepts of environmental and social capital, and discuss Chinas four stages of growth. We will conclude, as always, with market ramifications.

Over the past two years, how American society answers this question is becoming increasingly critical. There is a steady undercurrent in American politics that seeks to withdraw the U.S. from world affairs. Last week, we introduced this topic. This week, we will conclude our analysis, including market ramifications. This report will detail the costs to the U.S. for taking on the superpower role.

This topic was last discussed in our report from 2012. We have expanded sections of it in this update and, due to length, will present it in two parts. Over the past two years, how American society answers this question is becoming increasingly critical. There is a steady undercurrent in American politics that seeks to withdraw the U.S. from world affairs. In this report, we will discuss how the American republic began, how it evolved into an empire and how America conducted this role. Next week, we will finish our analysis and discuss market ramifications.

WWI was a devastating conflict and the postwar effects were substantial. From a market perspective, measuring the impact of geopolitics is difficult. Some events are short-term; others are more substantial but mostly cyclical. There are also events that permanently change the investing landscape. This report gives a short recap of the onset of WWI, and examines the problem that comes from induction, the logical process of observing the world and predicting the future. From there, we discuss the lessons learned from the post-WWII and post-Cold War era with an analysis of what may

On July 17, a Malaysian Airlines passenger plane was shot down over Ukraine, killing all 298 persons aboard. Evidence suggests that Russian-backed rebels fired the rocket, inadvertently attacking the civilian aircraft. In this report, we will discuss the recent escalation of tensions in Ukraine that led to the mistaken attack. We will examine the use of proxies in warfare between nuclear powers, both the costs and benefits. In terms of cost, the problem of blowback will be analyzed, with a focus on how this situation affects President Putin. We will conclude with market ramificat

Last year, Edward Snowden revealed documents indicating the NSA was actively gathering information on Americans and foreigners to the point where German Chancellor Merkel's cell phone was monitored. This revelation greatly unsettled relations between the U.S. and Germany. In this report, we will reiterate the "German Problem," the geopolitical situation that has shaped German behavior since its inception. We will delve into the recent spy scandal in more detail, discuss the underlying issues that are affecting American/German relations, and conclude with market ramifications.

Over the past few years, various prosecutorial arms of U.S. government entities have brought charges against foreign banks that have violated U.S. sanctions that were placed on different countries. In this report, we will discuss the general nature of U.S. sanctions and how these banks violated American law. From there, we will reiterate the dollars reserve currency role from both a historic and theoretical perspective and show how this role makes the currency and the U.S. financial system pivotal in the global economy. We will conclude with market ramifications.

As is our custom, we take the middle of the year to reflect on the current geopolitical situation. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape for the rest of the year. It is not designed to be exhaustive; instead, it focuses on the big picture conditions that we believe will affect policy and markets going forward. They are listed in order of importance: Americas Strategic Drift, Chinese Maritime Expansion, The German Problem, and The Remaking of the Middle East.

Recently, the insurgent group called the Islamic State of Iraq and the Levant (ISIL) has made stunning inroads into Iraq. ISIL represents a new threat to the region. In this report, we offer a historical analysis of how the modern Middle East was constructed and why the construct is coming under pressure. One of the keys to understanding why ISIL is so potent is to differentiate it from al Qaeda; we will analyze the differences. We will offer the strongest reason why we believe ISIL has staying power, also noting ISILs greatest weakness and the possibility of a broader sectarian confli

On April 14, the Nigerian terrorist group Boko Haram kidnapped 276 girls from their school in the town of Chibok, Nigeria. Investor interest in African economies has been increasing over recent years, piquing an interest in the continents rising economic and demographic power, Nigeria. This week, we will take a look at the country of Nigeria, including its history and economy. We will then describe the evolution of the terrorist group Boko Haram and its strategic goals and leadership. We will conclude with items of importance when investing in Africa, in general, and Nigeria, specifical

In this report, we will begin with a basic analysis of the oil markets. From there, we will examine Russia's economic dependence on energy and offer a historical analysis of Saudi Arabia's decisions in 1985 and 1997 to retake oil market share and the impact these choices had on the Soviet economy. Using this historical parallel, we will offer an example of how the U.S. could drive down oil prices in a bid to undermine Russia's economy.

The last American combat troops left Iraq in December 2011, marking the end of direct U.S. involvement in a nearly eight-year war. In this report, we will discuss recent developments in Iraq, including elections that were held on April 30. We will analyze Irans growing influence in the region and how the Iraq War furthered that influence. As part of this analysis, we will examine how Irans growing power and Americas apparent withdrawal is changing the behavior of other nations in the region. As always, we will conclude with market ramifications.

We are currently in the midst of the largest democratic election process on earth. Almost 815 million Indian citizens are going to the polls to cast their vote in the general elections. This week we will take a look at the Indian political landscape, the current election cycle and how the political system has brought the country to its current condition. We will pay special attention to the expected winner, Modi, with regard to both his political platform and history of governance in his current post. We will conclude by looking at the possible ramifications of his win.

For the past few months, Western leaders have been baffled by Russia?s behavior toward Ukraine and, to a lesser extent, Eastern Europe. To better understand Russia?s actions, we will examine the ideology of Aleksandr Dugin, the man who created the ideology that appears to be behind Putin?s behavior. We will offer a short biography of Dugin, focusing on his intellectual roots and the creation of the Eurasian Concept. Using Dugin?s framework, we will examine Putin?s recent behavior. As usual, we will conclude with market ramifications.

As we survey the political landscape for 2016, the next presidential election could be historic. In this report, we will examine the domestic political situation using four different archetypes to describe the U.S. political landscape. We will then offer a history of the interaction between these groups and address the likelihood of various policy outcomes based on the relative strengths and weaknesses of the four political groups. Unlike our usual reports, we will not conclude with market ramifications but instead discuss the transition to Part 3 of this analysis.

The Ukrainian crisis and the Crimean annexation have been closely watched by the Baltic countries (Estonia, Latvia and Lithuania). For many, the recent developments are bringing recollections of the start of the Soviet Union. In this week?s report, we will explore the geopolitical atmosphere in the Baltic states after the Russian annexation of the Crimea, focusing on Estonia. We will start with a brief history of the relations between Russia and its Baltic neighbors. We will then take a look at what the local press is reporting, the reports coming out of Russia and the word on the street.

In this report, we are tackling the geopolitical impact of the 2016 elections. Given the size of the topic, it will be discussed over a three-part series. As we survey the political landscape for 2016, the next presidential election could be historic. In our opinion, the last three presidents have been unable to create a consistent foreign policy that reflects America?s role as the unipolar superpower. We will begin by examining the economic challenges the next president will face, with a broad analysis of the issues of inequality and economic growth.

Now that the Crimean referendum has passed in favor of annexation, what will Putin do next? In other words, will he stop with the Crimea? In this report, we will look at the post-Cold War situation from Putin?s perspective. From this viewpoint, we will examine Putin?s likely next steps and how this will affect the U.S. and the rest of the developed world. As always, we will conclude with market ramifications.

Lost in the discussion surrounding the referendum in the Crimea is the ?legal? process. Simply put, how does part of an established nation decide to secede? Are there established protocols? In this report, we will offer a short history of the self-determination issue. With this background, we will discuss President Wilson?s inclusion of self-determination in his peace plan and examine how the U.N. has dealt with this issue. From there, we will analyze how self-determination was used during the Cold War and how those practices have continued after 1990. We conclude with market ramifications.

Over the past five weeks there have been a number of significant events that have occurred in Ukraine. A president has fled, a revolutionary government is forming and Russia has taken de facto control over the Crimea. The events themselves are momentous but the broader effects are significant as well. In this report, we will offer three reflections?Putin?s Gambit, The U.S. Adrift and A Dangerous New World. Although any of these could be a topic in themselves, we will shorten these issues to offer a single journey through the current crisis. As always, we will conclude with market ramifications

Venezuelan President Hugo Chavez died about a year ago. In the year since his passing, elections were held and Chavez's handpicked successor, Nicolas Maduro, won in what turned out to be an unexpectedly tight race. Since the elections, the Venezuelan economy and society have struggled. In this report, we will examine the underlying structure of Venezuela's political system and the divisions that exist. We will compare and contrast how Chavez was able to manage these divisions and how Maduro is struggling to replicate his success. As always, we will conclude with potential market ramifications.

Two weeks ago, we discussed Germany?s apparent early steps to return to regional power status. In this week?s report, we will examine Japan?s steady evolution to regional power status.

Since November, Ukraine has experienced widespread civil unrest. In late November, Ukrainian President Yanukovych decided not to join an EU-sponsored trade pact. This led to protests from Ukrainians who desired closer relations with Europe. In this report, we will begin by discussing the geopolitics of the nations involved, examining how nations have adjusted their policies over time to changing conditions. We will analyze the risks to the region from current unrest, including a look at the impact on emerging markets. As always, we will conclude with potential market ramifications.

The Transatlantic Trade and Investment Partnership (TTIP) is a trade and investment treaty being negotiated between the European Union (EU) and the U.S. The Trans-Pacific Partnership (TPP) is a similar pact between the U.S. and various Pacific Rim nations. We will examine overall details of each, focusing on how theyre different from traditional trade agreements. From there, we will present an analysis of the controversy surrounding the proposals, followed by a look at the geopolitical aims and likelihood that these treaties will be enacted. We conclude with potential market ramificatio

One of the seminal debates among historians is how the process of history develops, characterized as the "great man versus the great wave" debate. In this report, we will begin by developing this debate with relation to Americas superpower role; specifically, we will examine whether the U.S. is struggling with the superpower role because of a lack of leadership (a great man position) or because the wave of history is aligned against the U.S. keeping that role. As always, we will conclude with potential market ramifications.

The New York Times recently published an article that discussed a new version of a computer chip that will be released later this year that is expected to automate tasks that currently require direct programming. In this report, we will open with an examination of the philosophy of learning. We will then discuss the potential dangers of such machines, including the ability to perform humanlike actions without a moral sense. We will also examine the potential economic and social side effects. As always, we will conclude with potential market ramifications.