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NATO

The current Arctic military exercises are relatively small by NATO standards. But they are hugely significant. They are they the first manoeuvres in which Finland has participated as a full member of the Alliance.

In fact, 12 countries are participating; two of whom are NATO partners: Sweden and Switzerland. The latter has been neutral for more than half a millennium.

There is no chance that the Swiss will end their neutrality, but in the wake of Russia’s invasion of Ukraine Sweden decided that the NATO umbrella was more important than its 200-year non-alignment policy. Unfortunately, NATO membership requires the support of all 31 member countries. Two members, Turkey led by President Tayyip Recep Erdogan and Hungary led by self-declared illiberal Prime Minister Viktor Orban, blocked it.

The hope of the rest of the Alliance is that Erdogan will be more receptive to compromise following his 28 May re-election for a further five years. In the next few weeks there will be a constant stream of visitors to Ankara to try to persuade the Turkish leader to drop his veto. They will be led by NATO Secretary General Jens Stoltenberg but will also include senior officials from the US, UK, France, Germany, the Baltic states and, of course, Sweden.

The aim is to change Erdogan’s mind so that the Alliance welcome the Swedes into NATO alliance at the heads of government summit in Vilnius, Lithuania on 11-12 July. But NATO has to overcome Hungarian objections as well as Turkish.

Hungary’s veto is based on two important foreign policy pillars: good relations with Russia and Turkey. The former is rooted in land-locked Hungary’s total dependence on Russian oil and gas. This is also the reason Hungary continues to defy Western sanctions by buying Russian energy. The Turkish connection is based more on a common ideology between the two right-wing populists – Erdogan and Orban.

The official stated reason for Hungarian opposition is Swedish criticism of Orban’s democratic credentials. “Stockholm,” wrote a Hungarian government spokesperson recently, “sits on a crumbling throne of moral superiority.” It is a weak argument. Swedish criticism of Orban is no greater than that of most of Western Europe, and the hope is that if Erdogan has been brought into line, Orban will follow.

USA

America will NOT default on its debt. That is a near – but not quite – certainty. The House of Representatives has voted to raise the debt ceiling. The Senate has to follow suit by 5 June and is almost certain to do so.

In the end there was the inevitable compromise between the Republican-controlled House and Democratic President Joe Biden. To please the Republicans $1.3 trillion was shaved off the federal budget.

There were some cuts to welfare spending but not enough to alienate Democratic Congressmen but enough for Republicans to point to an achievement. The biggest White House concession was to allow the building of an oil pipeline through West Virginia in order to secure the support of troublesome Democratic Senator Joe Manchin as well as Republican congressmen.

In the context of the bigger picture the amount saved is insignificant. The Congressional Budget Office estimates that the federal government will spend $80-plus trillion over the next ten years.

The problem that both parties face is that there is virtually no room for discretionary spending cuts. To start with there is defense. Both parties support a large defense establishment. The result is that US defense spending is 3.1 percent of GDP and 12 percent of the federal budget.  American government spending on its military represents 40 percent of military spending in the entire world.

But an untouchable military is only part of the budget problem. Two-thirds of federal spending is the even bigger sacred cow of social security (state pensions) and medicare (medical insurance for the elderly). Both of these are increasing in line with an ageing American population.