Connect with us

Economics

Chuck Schumer and Joe Biden pile pressure on Binyamin Netanyahu

Published

on

CHUCK SCHUMER, the majority leader of the US Senate and America’s highest-ranking Jewish official, is fond of noting that his surname derives from the Hebrew word shomer, or guardian. Although his primary obligation is to America, he likes to say, he also feels a duty to live up to his name and act as a guardian of the people of Israel. Mr Schumer made this familiar point during a speech on March 14th, but his remarks on the Senate floor about Binyamin Netanyahu were anything but ordinary.

“Prime Minister Netanyahu has lost his way by allowing his political survival to take precedence over the best interests of Israel,” Mr Schumer said during a 44-minute speech. “I believe a new election is the only way to allow for a healthy and open decision-making process about the future of Israel.”

Presidents and secretaries of state have criticised Israel over the course of its 75-year relationship with the United States, typically on discrete issues for limited periods. Yet the de facto political leader of America’s Jews calling for political change in Jerusalem is a watershed moment, even as Mr Schumer stressed that “Israel has the right to choose its own leaders, and we should let the chips fall where they may.” It reflects a crisis of confidence.

Joe Biden, who often goes out of his way to avoid criticising American allies publicly, said the following day that Mr Schumer gave a “good speech”. (The president, however, fell short of fully endorsing it by only allowing that “many Americans” shared the majority leader’s concerns.) Mr Schumer’s Republican counterpart in the Senate, Mitch McConnell, called his remarks grotesque and hypocritical—the starkest example yet of the growing partisan gap on how to manage relations with the Jewish state.

What effect could Mr Schumer’s comments have on Israeli politics? Mr Netanyahu has not yet reacted, though his Likud party shot back in a statement that “Israel is not a banana republic.” Benny Gantz, a member of Mr Netanyahu’s war cabinet but a rival minister likely to replace him if elections were held, said Mr Schumer’s remarks were a mistake. In Washington earlier this month Mr Gantz met senior members of the Biden administration. A Gantz government would no doubt make the relationship easier, though unlike Mr Biden he is not keen on a two-state solution, so relations would still be far from simple.

“Israelis of all political views are coexisting in the same bubble of trauma, insecurity, fear and worry. It makes them all incapable of hearing anybody or anything else,” says Martin Indyk of the Council on Foreign Relations, a think-tank, and a former US ambassador to Israel. “They are largely oblivious to the suffering of the Palestinians and seemingly uncaring about the rift with the United States, Israel’s only reliable friend in this crisis.”

The greater immediate impact of Mr Schumer’s remarks is likely to be on the debate over Israel in America. The Senate leader and the president are among the most pro-Israel Democrats in American history, but many on the party’s left wing are deeply critical of the country’s government. Mr Biden initially kept his criticism of how Israel has conducted this war private. Recently he has been openly critical while refusing to use his leverage, such as by withholding military support, or backing UN resolutions condemning Israel.

Mr Schumer’s comments have given Mr Biden cover to take a tougher stance. But Aaron David Miller, of the Carnegie Endowment for International Peace, another think-tank (and a veteran negotiator of would-be Middle East peace deals), does not expect major changes to Mr Biden’s “passive-aggressive” approach just yet. The only way for Mr Biden to resolve the political, moral and policy conundrums that Israel’s assault on Gaza has produced, Mr Miller reckons, is for the images coming out of Gaza to change. Mr Biden may get tougher, “but I don’t see it happening now, particularly given the fact that for the first time in weeks, there may be some openings on the ground” as Israel permits more humanitarian assistance and sends negotiators to Qatar.

However, if an Israeli assault on Rafah, where some 1.4m Palestinian civilians are sheltering, produces massive casualties, Mr Biden’s tone could become much more critical, much faster. “Whatever happens,” adds Mr Indyk, “pressure is now an overt part of the US-Israel relationship.”

Economics

Germany’s election will usher in new leadership — but might not change its economy

Published

on

Production at the VW plant in Emden.

Sina Schuldt | Picture Alliance | Getty Images

The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.

As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.

Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.

Experts speaking to CNBC were less sure.

“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.

The CDU/CSU economic agenda

The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.

It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.

“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.

“It is still a reform program which pretends that change can happen without pain,” he said.

Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”

But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.

Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.

Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.

Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.

Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.

“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.

“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.

Change in German government will deliver economic success, says CEO of German employers association

Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.

“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.  

Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.

Coalition talks ahead

Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.

The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.

“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.

The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.

“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said.

Germany is 'lacking ambition,' investor says

Continue Reading

Economics

DOGE attacks a bastion of Republican internationalism

Published

on

Elon Musk has joined a war of ideas under the guise of a budget fight

Continue Reading

Economics

In Texas, vaccine-choice activists are ascendant

Published

on

Amid a measles outbreak they are lobbying for more “medical freedom”

Continue Reading

Trending