00:00It's unclear, and we heard this also with, you know, in Davos last week, it was definitely Mark Carney.
00:05That kind of broke away a little bit, that alliance with the U.S. or looking to China.
00:10But is China de facto the counterpart for allies that no longer-
00:15want to be dependent on the U.S.
00:17So you are seeing lots of countries now look-
00:20to diversify their relationships away from the United States, I think we see-
00:25that reflected with the EU attempting to get that Mercosur deal over the line.
00:30Last week, you're seeing Ursula von der Leyen, she's in India, looking to conclude a free trade agreement.
00:35The problem with China is many countries have problems with the regime.
00:40The nature of the regime and things the regime has been doing in the European theatre, that run-
00:45counter to European interests, that's aid and non-lethal aid into the Ukraine theatre, it's over-
00:50capacity, it's the trade distorting subsidies, and so as they try to find a way-
00:55through with the U.S. administration.
00:57I think there is a question now as to whether the de-
01:00risking approach that many countries have articulated now shifts.
01:05I think for Sama in particular, it will reinforce this sense of never-hear-kir.
01:10I think the Tories and reform will absolutely go after him for kowtowing to Beijing, but he'll try and make this-
01:15trip about the domestic agenda, jobs, investment, etc.
01:18But, I mean, if you get too close to-
01:20Does President Trump retaliate?
01:21Does President Trump retaliate?
01:22I mean, is everything-
01:23Are we questioning everything-
01:25that policymakers are doing in case Trump retaliates?
01:28I think that's one motivating fact.
01:30But as I say, I think there are other concerns many countries will have about getting off that-
01:35de-risking agenda, certainly for the Europeans and indeed for the Brits, and so they're going to try-
01:40to find a balance here, a way through where they both-
01:45remain, you know, close and constructive with the Americans, while at the same time cognizant-
01:50are the risks that come from getting closer with the Chinese?
01:55Well, so what's happening in the UK Labour Party?
01:57So, you know, Keir Starmer allies barred the Greater Manchester Mayor-
02:00from standing as Labour's candidate.
02:01I mean, this is a widely popular person, so does he feel threatened?
02:05I mean, Francine, you know my view.
02:07I don't think Starmer will see the year to conclusion.
02:09I think he is going to face-
02:10a leadership contest, the midterm regional election 7th of May.
02:13That's going to be a massive problem.
02:15for Starmer and for Labour given their likely performance in Scotland, in Wales, in-
02:20the English councils.
02:21And so, I think a leadership challenge is coming.
02:25Fernand would have been a favourite and a darling of the soft left.
02:28The unions like him, he's very popular obviously.
02:30with the base.
02:31And so that would have reflected, I think, a big threat for Starmer and that's what-
02:35they're trying to manage in the very short term.
02:36But that doesn't prevent these structural challenges that have prevented-
02:40labour from, you know, from performing well.
02:42They don't have a plan for power.
02:44Starmer hasn't managed-
02:45the parliamentary party well.
02:46The polling is abysmal.
02:47They don't have a clear narrative or a message.
02:50for the country.
02:51And so I think a leadership challenge will come.
02:53I think Angela Rayner is-
02:55my base case to replace him.
02:56If not, then I think West Streeting is highly likely to-
03:00succeed if Angela Rayner does not.
03:01Mej, what does it mean for the economy?
03:03You know, what they offer at the moment-
03:05what they say is stability.
03:06I mean, I think if it's a leader to the left of Starmer-
03:10it will be, they're going to want to pick apart the fundamental-
03:15let's say governing philosophy of this government-
03:18which is going to be a change to the fiscal rules.
03:20I don't think they're going to throw the fiscal framework in the bin.
03:23Angela Rayner-
03:25you know, these guys on the soft left, that's not the same constituency as-
03:30they were going to be with or in-
03:31in-
03:32in-
03:34in
03:35in
03:36in
03:38in
03:42in
03:43in
03:46in
03:47in
03:51in
03:53in
03:54in
03:55in
03:56in
03:57in
03:35fiscal rule but their instincts will be to borrow and spend more i don't think they'll want to
03:40sign up to the fiscal straitjacket that Reeves and Starmer have alighted on that is dictating so much
03:45what the government is and is not able to do on their domestic agenda what happened over Greenland
03:50i love your piece actually that you know it says Trump's ruling out of military action does not defuse a crisis
03:55that's what i felt right i mean there was like a sigh of relief in Davos saying oh he's not sending
03:58the military
04:00crisis averted let's move on right but it's deeply disturbing actually when that's even
04:05you know a base case so i wrote that piece after Trump had excluded a military
04:10intervention so military adventure but then we had the further climb down later in
04:15the day where he talked about um working through the nato framework so now i do think
04:20the the most extreme tail risks have been controlled for the tariff threat and any
04:25interlateral intervention whether militarily or through economic coercion so he's going to do
04:29a deal in the nato framework
04:30and bilaterally with Copenhagen and Greenland i think the remarkable thing is this is
04:35a deal that's been on the table for over a year the Danes the Americans and the Greenlanders
04:40have been talking about reinforcing security on the island for the arts
04:45to take but Trump was opposed to working with NATO and felt that he needed so
04:50control over and control over the island in order to deliver on these security goals i think a
04:54combination of your
04:55European resolve congressional congressional and public opinion in America and of
05:00course market pressure resulted in that big taco that we all saw in Davos
05:05last week i mean does the president go go back after Greenland because he doesn't i mean
05:10a lot of the times what i'm told by people close to him is that he just doesn't let go i mean i think on Green
05:15land i think we're in a more boring negotiating corridor now i think the risks of
05:20that have largely been controlled for and i suspect there will now be an agreement that sees the American
05:25Americans reinforce their security on the island but they do it in a context through NATO with Russia
05:30and bilaterally with the Danes maybe the upgrade the 1951 treaty
05:35that will will give the u.s more of what they're looking for sovereign bases on the island is something that's been talked about
05:40as long as that's done in conjunction with Denmark and Greenland that may be a possibility it doesn't mean
05:45other risks in the transatlantic alliance don't remain real i mean Europe has signed up to a
05:505% spending target by 2035 on security and defense many countries France
05:55just don't have the fiscal pathway to get there the UK and France being two very obvious examples
06:00and so at the moment of this midterm review there may be a question when the Trump administration
06:05looks at the numbers and says allies aren't following through on their commitments they remain very real
06:10risks in the Ukraine theater the administration which by and large is forgotten about which is
06:15been completely forgotten about but again where the administration is really pressuring Zelensky
06:20to concede territorial concessions in the Donbass in particular in Donetsk in areas of territory
06:25that the Russians have not been able to win on the battlefield so that remains a next
06:30existential and very real risk for Europe and of course implementation of the trade deal
06:35is now stuck because the European Parliament said they're not going to ratify it so that creates the risk of
06:40more bilateral tensions there's of course things around free speech and the digital
06:45services act and the digital markets act and so there are many irritants and many potential sources of
06:50restriction in the transatlantic relationship that may blow things up again
06:53Do you have a better understanding now with this new
06:55world order could look like?
06:56I mean I think the Europeans are getting to grips with the new world
07:00world order that isn't governed on the basis of rules and norms and institutions that
07:05they're so comfortable with and I think we are beginning to see the Europeans flex a little bit
07:10more but again Francine you know it's about that draggy agenda on economic competitiveness
07:15it's about capital markets union about the tech ecosystem about doing more to ensure
07:20all the Europeans as Macron has always said can be more strategically autonomous and I think there
07:24there is still some way
07:25there is still some ways to go
07:26is there a timeline problem that you can be more autonomous but it takes time to
07:30build up your supply chains to have access to rare earth
07:32I mean I think it's a crisis and non-crisis
07:35context problem for the Europeans.
07:36I think there is always this question about will Europe perform well in a crisis
07:40and my general expectation is it tends to perform better than
07:45consensus suggests the problem with Europe is it doesn't have a playbook for government
07:50it's happening in normal times so as soon as the existential threat has removed itself
07:55as soon as the environment is a bit less menacing everybody again begins to rest on
08:00their laurels and some of these important forms don't move forward
Comments