A New Cold War That’s Nothing Like the Old One

(Bloomberg) --

If there is to be a Cold War 2.0 as many believe, it’s set to be radically different from the original, with any new “digital iron curtain” — forecast to split the world into U.S. and Chinese technology zones — looking more like spaghetti than iron.

The ferocity of competition between Washington and Beijing to lead the world in everything from artificial intelligence to robotics is undeniable. Some disentanglement of the U.S. and Chinese economies is already underway, amid a trade war. And yet the kind of separation seen either side of the Berlin Wall until 1989 remains a distant prospect.

The reluctance of the U.K., the closest of U.S. allies, to back Washington’s drive to keep China’s Huawei out of Western 5G networks suggests a world far more reluctant to pick sides than in the 1940s and 50s.

Then there’s China’s deep integration into the global market economy — never true of the Soviet Union — as well as the open source nature of much AI research, and the ability of each side to damage the other by withholding, say, computer chips or rare earth metals. At best, it would be a very messy divorce.

Global Headlines

Hong Kong violence | Protesters clashing with police in downtown Hong Kong — officers fired tear gas, rubber bullets and bean-bag rounds — have vowed to stay until the government withdraws controversial legislation that would allow extraditions to China. The Legislative Council delayed its debate  and the timeline for a vote, originally planned for next week, is unclear. U.S. Congressional leaders including House Speaker Nancy Pelosi called for a review of Hong Kong’s special trading privileges if lawmakers pass the bill. Beijing said it “will continue to support” the government including beleaguered Chief Executive Carrie Lam, who argues the legislation is necessary to close a legal loophole that makes the city a refuge to criminals.

Tehran Bound | Japanese Prime Minister Shinzo Abe left on a U.S.-backed mission to Iran today, where he’ll seek to use the good relations his country has with both nations to prevent their growing friction from igniting a war. With the two sides so far apart, any step that reduces mistrust and hostility would be an achievement for Abe, who’s making the first trip to Tehran by a sitting Japanese prime minister in 41 years.

Not souring yet | Rural Americans are sticking with U.S. President Donald Trump even as dissatisfaction grows among farmers over his trade policies. “We’re tired and frustrated,” said Scott Henry, a fourth-generation Iowa corn and soybean farmer. Still, Henry, who voted for Trump in 2016, hasn’t abandoned the man who promised to revive the fortunes of “forgotten” Americans. Nor has the rest of farm country, which is key to Trump’s re-election hopes.

• Click here for more on Trump’s net worth, which rose to $3 billion, a 5% gain over the past year.

Ready to roar back | Trump’s patience for his pact averting tariffs on Mexico depends on a quick drop in migration across the border — something his own administration and political allies see as an unrealistic expectation. That leaves the situation ripe for another showdown. Trump flaunted a piece of paper yesterday, claiming it was the first page of a secret annex to his Mexico agreement. But Mexico's foreign minister denied any secret deal.

• Katia Dmitrieva traveled to Laredo, Texas, to report on the impact of tariff tensions on that border town.

Shielding the government | President Jair Bolsonaro’s allies are closing ranks to avoid a scandal involving one of his “superministers” from derailing the approval of reforms including the overhaul of Brazil’s pension system. Leaked messages suggest the judge-turned-justice minister Sergio Moro’s relationship with the anti-corruption prosecutors might have been a bit too cozy, prompting calls for his resignation.

What to Watch

• A U.S. House panel plans to vote today on a measure holding Attorney General William Barr and Commerce Secretary Wilbur Ross in contempt for refusing to provide information about plans to add a citizenship question to the 2020 Census.
• Former U.K. Foreign Secretary Boris Johnson, favored to win the race to become the new Conservative leader and prime minister, faces his first public questioning in months today at his campaign launch. Whoever wins will have to push Brexit through after Theresa May’s failed attempts.
• Trump meets with Polish President Andrzej Duda at the White House and plans to make an announcement about U.S. troop commitments after months of discussions about establishing a military base that Duda has dubbed “Fort Trump.”

And finally…Opponents of the proposed Hong Kong extradition law — some wearing goggles and gas masks, and one spotted with a Captain America shield — clogged major roads near the legislature through the day, setting up metal barricades and attempting to storm the building, in scenes reminiscent of the 2014 “Occupy” movement protesting electoral changes. Click here for a look at today’s events in pictures. And here for a guide to the law that has brought them out. Plus a timeline of how the plan for a law started.

--With assistance from Kathleen Hunter, Walter Brandimarte, Karen Leigh and Jon Herskovitz.

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Ruth Pollard

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