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Standard Deductions: U.S. Corporate Tax Policy

April 18, 2014 Comments off

Standard Deductions: U.S. Corporate Tax Policy
Source: Council on Foreign Relations

The U.S. system for taxing corporate profits is outdated, ineffective at raising revenue, and creates perverse incentives for companies to shelter profits overseas. It is also, for most U.S. companies most of the time, a pretty good deal, which is one of the big reasons why any serious overhaul will be so difficult to achieve.

This is the fourth progress report and scorecard from CFR’s Renewing America initiative. Previous progress reports and scorecards have evaluated transportation infrastructure, federal education policy, and trade.

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Emerging Arctic Explored in New CFR InfoGuide

April 14, 2014 Comments off

Emerging Arctic Explored in New CFR InfoGuide
Source: Council on Foreign Relations

The Council on Foreign Relations (CFR) has released a new interactive guide examining the economic opportunities and environmental risks emerging in the Arctic. Climate change, technological advances, and a growing demand for natural resources are driving a new era of development in the Arctic region. Many experts assert that Arctic summers could be free of sea ice in a matter of decades, opening the region up to hundreds of billions of dollars in investment, most notably in energy production and shipping.

Backgrounder: Ukraine in Crisis

March 10, 2014 Comments off

Backgrounder: >Ukraine in Crisis
Source: Council on Foreign Relations

Ukraine’s most prolonged and deadly crisis since its post-Soviet independence began as a protest against the government dropping plans to forge closer trade ties with the European Union and has since spurred a global standoff between Russia and Western powers. The crisis stems from more than twenty years of weak governance, a lopsided economy dominated by oligarchs, heavy reliance on Russia, and sharp differences between Ukraine’s linguistically, religiously, and ethnically distinct eastern and western halves. After the ouster of President Viktor Yanukovich in Feburary 2014, Russian moves to take control of the Crimean Peninsula signaled Moscow’s intent to retain its sphere of influence and raised serious questions about the ability of the state’s new leaders to provide stability and a path to meaningful reforms.

The Rise of Islamic Finance

February 24, 2014 Comments off

The Rise of Islamic Finance
Source: Council on Foreign Relations

Global Islamic financial assets have soared from less than $600 billion in 2007 to more than $1.3 trillion in 2012, an expansion rooted in the growing pool of financial assets in Muslim-majority countries driven by consumer demand for products that comply with religious codes. Assets are concentrated in Muslim countries of the Middle East and Southeast Asia, but the sector appears poised to enter Western markets and complement conventional financing. Prime Minister David Cameron announced in 2013 that the United Kingdom will issue a £200 million ($327 million) Islamic bond, or sukuk, making it the first non-Muslim country to tap into Islamic financing. Companies in the United States are also considering Islamic finance to fund business ventures and infrastructure projects. Demand for new Islamic investments is expected to outstrip supply by as much as $100 billion by 2015, an imbalance that could translate to much-needed liquidity in some tight markets. But the industry remains small and will need to expand considerably to have a significant impact on global financial markets.

Issue Guide: Crisis in Ukraine

February 21, 2014 Comments off

Issue Guide: Crisis in Ukraine
Source: Council on Foreign Relations

The latest eruption of violence in Ukraine has brought its protracted political unrest—rooted in a dispute over strengthening ties with the European Union—to its bloodiest phase yet. Some analysts are concerned that further bloodshed will end the chance for crucial power-sharing compromises seen as the best path for resolving the dispute and restoring stability. This roundup of expert analysis examines the conflict and consequences for regional stability.

Reorienting U.S. Pakistan Strategy

January 22, 2014 Comments off

Reorienting U.S. Pakistan Strategy
Source: Council on Foreign Relations

As U.S. and coalition forces prepare to draw down troops in Afghanistan, this new report urges Washington to view Pakistan not solely or even principally in the context of U.S.-Afghanistan policy, but rather to reorient the relationship toward Asia. “A U.S. strategy for Asia that does not contemplate Pakistan’s role is incomplete, and a U.S. strategy for Pakistan that primarily considers its role in the context of Afghanistan is shortsighted,” writes the report’s author, Daniel S. Markey, CFR senior fellow for India, Pakistan, and South Asia.

Afghanistan After the Drawdown

December 15, 2013 Comments off

Afghanistan After the Drawdown
Source: Council on Foreign Relations

The United States has now been at war in Afghanistan for more than a decade. The sacrifice in blood and treasure has been substantial. Some 2,300 American servicemen and women have lost their lives, more than 19,000 have been injured, and nearly $650 billion has been spent over the course of the United States’ longest war. The results, however, can only be described as inconclusive. The reach and effectiveness of the Afghan central government remain circumscribed, challenged by various armed groups and undermined by pervasive corruption. The economy has grown rapidly, albeit from a low starting place, but remains largely dependent on international aid flows that will certainly shrink.

The combination of high costs and middling returns has left the American public increasingly skeptical of the utility of the U.S. commitment to Afghanistan. The 2011 death of Osama bin Laden, mastermind of the 9/11 attacks that brought the American military to Afghanistan in 2001, only reinforced that perception. Yet the United States retains interests in Afghanistan, including preventing the reemergence of a terrorist safe haven and promoting stability in the region, which could be further undermined by a total withdrawal of American military forces.

As this Council Special Report explains, 2014 will be a pivotal year for Afghanistan. An election will, presumably, bring a new president to Kabul. The U.S. military will complete its transfer of responsibility to the Afghan National Security Forces, making the war effort Afghan-led. And, as donor financing begins to come down, the Afghan economy will need to find sustainable, internal sources of growth.

United States and Afghanistan’s Security and Defense Cooperation Agreement, November 2013

November 22, 2013 Comments off

United States and Afghanistan’s Security and Defense Cooperation Agreement, November 2013
Source: Council of Foreign Relations

Secretary of State John Kerry and Afghan President Karzai agreed on a draft text regarding the U.S.-Afghan security partnership after international combat troops withdraw. The agreement is set to take effect on January 1, 2015 and remain in force through 2024.

Backgrounder — Governance in India: Corruption

November 13, 2013 Comments off

Backgrounder — Governance in India: Corruption
Source: Council on Foreign Relations

With a booming economy throughout the 2000s, India was touted as one of the most promising major emerging markets. But that breakneck growth sputtered to a decade low in 2012, with many observers pointing to the corrosive effect of endemic corruption—including a spate of scandals under Prime Minister Manmohan Singh—as a culprit. Perhaps more than India’s weak currency and rising inflation, the graft problem has undermined institutions and thwarted efforts to reduce poverty and catalyze sustainable growth in the world’s largest democracy. Public revelations of corruption, including major scandals in the telecommunications and coal industry, have galvanized a rising middle class with increased demands for better governance. The tide has spurred new political movements, and forced Prime Minister Singh’s Congress Party to address transparency and marshal reforms. As the country enters a busy political season, culminating in the 2014 general elections, corruption is expected be a cornerstone issue—and one with big implications for India’s development.

Quarterly Update: Foreign Ownership of U.S. Assets

October 17, 2013 Comments off

Quarterly Update: Foreign Ownership of U.S. Assets
Source: Council on Foreign Relations

Foreign ownership of U.S. assets has increased significantly since 1945, growing especially quickly over the past two decades. This growth is the result of a general increase in cross-border investment, with rising foreign ownership of U.S. assets nearly matched by rising U.S. ownership of assets abroad.

Backgrounder — Foreign Investment and U.S. National Security

October 8, 2013 Comments off

Backgrounder — Foreign Investment and U.S. National Security
Source: Council on Foreign Relations

The United States is both the world’s largest foreign direct investor and the largest beneficiary of foreign direct investment (FDI). But like every sovereign country, it has sought to temper its embrace of open markets with the protection of national security interests. Achieving this balance, which has shifted over time, has meant placing certain limitations on overseas investment in strategically sensitive sectors of the U.S. economy.

The Committee on Foreign Investment in the United States was established in 1975 to review acquisitions of U.S. firms by foreign entities that could erode national security. Recent political opposition to some high-profile foreign investment activity, including the 2006 Dubai Ports World controversy, has fed a perception among some that the United States has stepped back from its open-door policies. The federal government, however, reviews only a small fraction of the hundreds of annual foreign acquisitions, and it blocks transactions in only the rarest of cases. In a record-setting deal, CFIUS approved the sale of Smithfield Foods to Shuanghui International Holdings Ltd. in September 2013, the largest Chinese purchase of a U.S. company in history.

Washington has traditionally led international efforts to bring down barriers to cross-border capital flows, with the goals of expanding investment opportunities for U.S. multinational businesses and creating a more stable, efficient international system. At the same time, the United States relies greatly on foreign inflows to compensate for a shortage of savings at home. The United States routinely ranks among the most favorable destinations for foreign direct investors. Foreign direct investment—the ownership or control by a foreign entity of 10 percent or more of a domestic enterprise—plays a modest but growing role in the U.S. economy.

Backgrounder — Hydraulic Fracturing (Fracking)

October 7, 2013 Comments off

Backgrounder — Hydraulic Fracturing (Fracking)
Source: Council on Foreign Relations

Geologists have known about vast reservoirs of natural gas and oil trapped in shale formations across the United States for decades, but extraction techniques weren’t available and the resources remained untapped. Shale didn’t factor into most serious analyses of U.S. energy prospects until the combination of two old technologies—horizontal drilling and hydraulic fracturing, known colloquially as fracking—was perfected. A drilling renaissance over the past five years has transformed the United States into a leading natural gas producer and potential energy exporter, reversing a decades-long trend of increasing reliance on foreign sources of oil and gas. Shale production helped reduce net imports of energy by one-third between 2011 and 2013, according to the U.S. Energy Information Administration, heralding a new era of U.S. energy security with broad implications for global markets and international relations.

Meanwhile, Americans are benefitting from lower energy prices and jobs are being created in the oil and gas sector and related industries. Many other countries are studying the U.S. example and plan to tap their shale resources. But analysts, environmental groups, and governments are concerned about the costs of fracking and the risks to the environment.

Trends in U.S. Military Spending

July 31, 2013 Comments off

Trends in U.S. Military Spending
Source: Council on Foreign Relations

Military budgets are only one gauge of military power. A given financial commitment may be adequate or inadequate depending on the number and capability of a nation’s adversaries, how well a country invests its funds, and what it seeks to accomplish, among other factors. Nevertheless, trends in military spending do reveal something about a country’s capacity for coercion. Policymakers are currently debating the appropriate level of U.S. military spending given increasingly constrained budgets and the winding down of wars in Iraq and Afghanistan. The following charts present historical trends in U.S. military spending and analyze the forces that may drive it lower.

These charts draw on data from the Stockholm International Peace Research Institute (SIPRI) and from the U.S. Bureau of Economic Analysis (BEA). Both data sets include spending on overseas contingency operations as well as defense. This distinguishes them from data used in the U.S. budget, which separates defense spending from spending on overseas operations.

Building the American Workforce

July 23, 2013 Comments off

Building the American Workforce
Source: Council on Foreign Relations

There has never been greater urgency for expanding and improving U.S. workforce training programs. To an unprecedented extent, employers now need and expect applicants with “middle skills” qualifications: a level of education and training beyond a high school diploma, but less than a bachelor’s degree. But the supply of middle-skilled jobseekers lags behind. The federal government should corral the country’s siloed and disjointed workforce-development programs in line with a common national strategy. It can start by developing performance measures as well as data warehouses that link workforce services with employment outcomes. Federal funding, which has been scaled back in recent decades, should be restored. The training programs themselves should also be better targeted at low-income and disadvantaged workers, provide more longer-term services, and engage more directly with employers for stable job placements.

H5N1: A Case Study for Dual-Use Research

July 17, 2013 Comments off

H5N1: A Case Study for Dual-Use Research
Source: Council on Foreign Relations

Gigi Gronvall examines the controversy surrounding the publication of two H5N1 flu–transmission studies as a case study to illuminate why dual-use research of concern is not just a problem for scientists. This paper clarifies the arguments that arose for and against publication, offers lessons learned regarding future dual-use research to scientists, research directors, publishers, and policymakers, and promotes a reasonable consideration of the risks and benefits of dual-use research.

Self-Defensive Force Against Cyber Attacks: Legal, Strategic and Political Dimensions

July 8, 2013 Comments off

Self-Defensive Force Against Cyber Attacks: Legal, Strategic and Political Dimensions
Source: Council on Foreign Relations

When does a cyber attack (or threat of cyber attack) give rise to a right of self-defense—including armed self-defense—and when should it? By “cyber attack” I mean the use of malicious computer code or electronic signals to alter, disrupt, degrade or destroy computer systems or networks or the information or programs on them. It is widely believed that sophisticated cyber attacks could cause massive harm—whether to military capabilities, economic and financial systems, or social functioning—because of modern reliance on system interconnectivity, though it is highly contested how vulnerable the United States and its allies are to such attacks.

This article examines these questions through three lenses: (1) a legal perspective, to examine the range of reasonable interpretations of self-defense rights as applied to cyber attacks, and the relative merits of interpretations within that range; (2) a strategic perspective, to link a purported right of armed self-defense to long-term policy interests including security and stability; and (3) a political perspective, to consider the situational context in which government decisionmakers will face these issues and predictive judgments about the reactions to cyber crises of influential actors in the international system.

Addressing Cyber Threats to Oil and Gas Suppliers

June 28, 2013 Comments off

Addressing Cyber Threats to Oil and Gas Suppliers
Source: Council on Foreign Relations

In this Energy Brief, Blake Clayton and Adam Segal argue that cyber threats to oil and gas suppliers pose an increasingly challenging problem for U.S. national security and economic competitiveness. Attacks can take many forms, ranging from cyber espionage by foreign intelligence services to attempts to interrupt a company’s physical operations. These threats have grown more sophisticated over time, making them more difficult to detect and defend against. So too have the actors behind them, which have evolved from lone hackers with few resources to state-sponsored teams of programming experts. Several of the world’s major oil and gas producers, including Saudi Aramco (officially the Saudi Arabian Oil Company) and Qatar’s RasGas, have fallen victim to cyberattacks since 2009. Others, such as Chevron, have also had their networks infected.

Clayton and Segal contend some damage was done in each of these cases, but the costs of future breaches could be much higher, whether to corporate assets, public infrastructure and safety, or the broader economy through energy prices. Successful cyberattacks threaten the competitiveness of the U.S. oil and gas industry, one of the nation’s most technically advanced and economically important sectors. While intrusions previously focused on the theft of intellectual property and business strategies, the malware attack on Saudi Aramco reflects a worrying qualitative change toward attacks with the potential for causing physical disruptions to the oil and gas supply chain.

Self-Defensive Force Against Cyber Attacks: Legal, Strategic and Political Dimensions

June 26, 2013 Comments off

Self-Defensive Force Against Cyber Attacks: Legal, Strategic and Political Dimensions
Source: Council on Foreign Relations

When does a cyber attack (or threat of cyber attack) give rise to a right of self-defense—including armed self-defense—and when should it? By “cyber attack” I mean the use of malicious computer code or electronic signals to alter, disrupt, degrade or destroy computer systems or networks or the information or programs on them. It is widely believed that sophisticated cyber attacks could cause massive harm—whether to military capabilities, economic and financial systems, or social functioning—because of modern reliance on system interconnectivity, though it is highly contested how vulnerable the United States and its allies are to such attacks.

This article examines these questions through three lenses: (1) a legal perspective, to examine the range of reasonable interpretations of self-defense rights as applied to cyber attacks, and the relative merits of interpretations within that range; (2) a strategic perspective, to link a purported right of armed self-defense to long-term policy interests including security and stability; and (3) a political perspective, to consider the situational context in which government decisionmakers will face these issues and predictive judgments about the reactions to cyber crises of influential actors in the international system.

Backgrounder: U.S. Domestic Surveillance

June 19, 2013 Comments off

Backgrounder: U.S. Domestic Surveillance

Source: Council on Foreign Relations

  • Introduction
  • What was the domestic surveillance controversy under Bush?
  • What is the domestic surveillance controversy under Obama?
  • Why did this become an issue in mid-2013?
  • What are the challenges to domestic surveillance policy?
  • Additional resources

Resilient American Values: Optimism in an Era of Growing Inequality and Economic Difficulty

May 8, 2013 Comments off

Resilient American Values: Optimism in an Era of Growing Inequality and Economic Difficulty

Source: Council on Foreign Relations

Despite an extended period of economic difficulty, Pew Research Center pollsters Andrew Kohut and Michael Dimock show that Americans’ core values and beliefs about economic opportunity, and the nation’s economic outlook, remain largely optimistic and unchanged. There is also little evidence that economic class is becoming a greater factor in shaping American values than in the past. Americans are certain that the nation can solve its problems, that hard work ultimately pays off, and that income divides are an acceptable part of a healthy economy. But they increasingly see a lack of fairness in public policies that are failing to promote economic opportunity.

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