Category Archives: Politics

Europe, European Commission, Government, Politics, Society, Technology, United States

The EU must lay down the law on big tech

DIGITAL MARKETS

Intro: Donald Trump’s administration is seeking to bully its way to the deregulation of US digital giants. In the interests of EU citizens, these attempts must be resisted

HENNA VIRKKUNEN, the European Union’s most senior official on digital policy, has fired a broadside when she said: “We are very committed to our rules when it comes to the digital world”. Such sentiments bring with it the near certainty of a future confrontation with Elon Musk. Ms Virkkunen , who is the EU vice-president responsible for tech sovereignty, also added that: “We want to make sure that our digital environment … is fair and it’s safe and it’s also democratic.”

In recent days, these words were followed by deeds. In the first sanctions handed down since the establishment of the EU’s Digital Markets Act, the European Commission fined Apple Euros500m and Meta Euros200m, after finding them guilty of unfair business practices that exploited their entrenched online “gatekeeper” position. Apple, for example, was judged to have unfairly restricted developers from distributing apps outside its own App Store, where it takes a cut from sales.

Are we to perceive these fines as being a form of tough action or nothing more than tokenism? It is safe to say these fines will not overly concern either company’s accountants. Apple’s revenue last year was Euros344bn. There are also indications that, in other areas, Brussels may be seeking to dial down tensions with the US tech giants as it seeks to avoid a full-on trade war with Washington.

A separate investigation into X (formerly Twitter) under the auspices of the Digital Services Act – which deals with content moderation – found it in preliminary breach of EU rules, following Mr Musk’s takeover in 2022. No fine has yet been issued. Meanwhile there are growing fears that EU regulations on artificial intelligence, intended to reduce the risk of disinformation and political manipulation, are in danger of being diluted under pressure from the Trump administration.

Given the current volatility of transatlantic relations, it is understandable that a degree of cautious restraint is needed. But US bullying of Brussels over its regulation of big tech on behalf of EU citizens must be robustly resisted. Trump’s senior adviser for trade and manufacturing, Peter Navarro, has mischaracterised European digital regulation as a non-tariff barrier and form of “lawfare” against American companies. The reality, though, is more mundane: US market dominance means its tech giants will inevitably be the most affected by efforts to govern a space that is now part of the architecture of everyday life.

That task, vital to maintaining a healthy public sphere, should be kept distinct from fraught trade negotiations with the White House. Easier said than done perhaps, given the US President’s all-embracing mercantilism. Nonetheless, EU politicians – and British ones – must not be intimidated into an ill-judged deregulatory path with potentially damaging implications for democracy.

These fines might have been financially small given the size of the revenues they generate but they do at least represent a necessary statement of intent. Alongside its investigation into X, the commission has inquiries ongoing into TikTok and Meta, also relating to content moderation. MEPs are now calling for those too to be pushed to a conclusion.

This may be the acid test. The US vice-president, JD Vance, has made it clear that the White House intends to act as the political wing of US big tech, and has compared European attempts to combat online disinformation and illegal content to Soviet-era censorship. Ms Verkkunen should remain adamant and stick to her guns – and ignore the flak flying from Washington.

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Education, Politics, United States

The US administration’s attack on universities is an affront to democracy

AMERICAN UNIVERSITIES

IN the authoritarian playbook, enfeebling universities is an early move in the state seizing control. It has been studied eagerly by the likes of Viktor Orbán in Hungary. Authoritarians and one-party states centrally target universities with the aim of restricting dissent. There are instances now, too, where scholars of influential universities in America, such as Yale, are leaving the US for other countries such as Canada because of the political climate and the battle that is escalating over higher education.

It is not merely because universities are often bastions of liberal attitudes and hotbeds for protest. They also constitute one of the critical institutions of civil society; they are a bulwark of democracy. The Trump administration is taking on judges, lawyers, NGOs, and the media: it would be highly surprising if universities were not on the list. They embody the importance of knowledge, rationality, and independent thought.

The evidence is now clear to see. In a typically brazen move, Donald Trump has accused Harvard of being a threat to democracy, and has become one of his administration’s top targets. The US government is attacking diversity, equity, and inclusion efforts, and says it is tackling the failure of universities to root out antisemitism – a claim that is widely challenged. While most Trump supporters are unlikely to take issue with cutting billions of dollars of public spending on wealthy elite institutions, it has to be recognised that much of that money goes to scientific and medical research that enriches the US as a nation and benefits vast numbers of people who have never ventured near an Ivy League university.

The administration’s shocking demands of Harvard include federal oversight of admissions, the dismantling of diversity programmes, the curtailment to recruitment of international students “hostile to American values”, and the compelled hiring of “viewpoint diverse” staff.

Harvard has commendably chosen to fight back. Its president, Alan Garber, insists the university will not surrender its independence or relinquish its constitutional rights. It is suing the government over the freeze on $2.2bn in federal funding, part of a threat to withhold $9bn. That is encouraging others to speak out. More than 150 university presidents have signed a joint letter denouncing “unprecedented government overreach and political interference”.

Many have pointed out that the world’s richest university can afford to stand firm thanks to its unrivalled $53bn endowment and sympathetic billionaire alumni. Nonetheless, that same prestige and power is what has made it the primary target: force it to fold, and weaker institutions will follow. It’s worth noting that Harvard toughened its position after faculty, students, and alumni pushed hard for it to do so, warning that concessions would only encourage the administration. Columbia acquiesced to an extraordinary list of demands but some $400m of withheld funding has yet to be restored, and the administration is reportedly seeking to extend control over the university.

Troubling, because whatever comes of Harvard’s lawsuit, this is an administration that has already chosen to ignore court rulings. It may step up its assault, by revoking charitable status and clamping down on international students. Still, Harvard is fighting back not just because it can, but because it must. In doing so, it is defending not only academic freedom, but democracy more broadly. It will inspire others to do the same.

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Banking, Economic, Government, IMF, Politics, Society, United States

Trump’s economic agenda collides with fragile financial systems

FINANCIAL ECONOMY

THE International Monetary Fund (IMF) is renowned for its rational level-headedness and is the calmest of all the global institutions. But when these usual and calm ideals are abandoned by technocrats to sound the alarm on the political roots of global financial instability, it’s time to pay close attention. The IMF is warning of a non-negligible risk of a $1tn hit to global output, as Donald Trump’s erratic “America first” agenda (part oligarchic enrichment scheme, part mobster shakedown) collides with a perfect storm of global financial vulnerabilities.

Such a shock would be equivalent to around a third of that experienced in the 2008 crisis, and would be felt in a much more fragile and politically charged environment. This time, the crisis stems not just from volatility in the markets, but from the politics at the heart of the system governing the US dollar. The IMF’s latest Global Financial Stability Report sees the danger in Trump’s trade policies, especially his “liberation day” announcements, which have pushed up America’s effective tariff rate to the highest in over 100 years.

The IMF has given notice to investors that Trumpian instability was taking place as US debt and equities – especially tech stocks – were overvalued. It cautions that hedge funds have made huge bets that have gone sour, requiring them to sell US treasuries for cash and potentially deepening the chaos in bond markets. Ominously, the IMF draws the comparison, first made by the analyst Nathan Tankus, with the “dash for cash” in 2020 during Covid. Then, the Federal Reserve rescued US treasury markets directly. Developing nations, already grappling with the highest and real borrowing costs in a decade, may now be forced to take on even more expensive debt just to cushion the blow from Trump’s new tariffs, risking a much feared “sudden stop” in capital flows.

At the heart of this chaos stands the US, the very country met to uphold the global financial architecture. Troubling, too, is the warning from Columbia University who have wondered whether the markets had begun to “sell America” after US long-maturity bond prices fell precipitously. The thinking is that markets were no longer responding to economic fundamentals but to politics as a systemic risk factor. In this case: Trump’s tariff threats and his increasing political pressure on the Fed’s chair, Jerome Powell.

Trump’s relentless attacks on the Fed chair have only added to capital flight from US equities, bonds, and the dollar itself. The money is fleeing to safe havens such as gold. Some of the loss has been clawed back, but at what cost? Investors aren’t just nervous about inflation or growth – they’re hedging against political chaos. That might explain the seemingly divergent IMF messaging: blunt systemic warnings in its report versus the soothing market-facing comments from a senior official at the IMF’s press conference. This is central bank diplomacy. The institution is signalling that it is worried while trying not to spark a self-fulfilling panic in treasuries and the dollar.

The real issue and concern here is not technical dysfunction in treasury markets or the mechanics of the Federal Reserve, which are the underpinning and bedrock of the global financial system. It’s about the politicisation of the monetary-fiscal nexus under a Trump regime that is fundamentally hostile to the norms of liberal-democratic governance. When even the dollar is no longer a safe haven, what – or who – can be?

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