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Question 1.
The Financial Times reported on 6 December 2022 that the Petrobras CEO in Brazil, Caio Mario
Pases de Andrade, will leave the state-controlled oil and gas producer to enable President-elect
Lula to name a new chief executive. Paes de Andrade became the PB CEO in June of this year,
thereby serving as President Bolsonaro’s fourth PB chief in the past two years. President Bolsonaro
named each new PB chief saying that his predecessor had failed to reduce oil and petrol prices for
the Brazilian people. Paes de Andrade served in the Bolsonaro ministry of economy before being
named PB CEO and will take a position on the staff of the newly elected governor of State of Sao
Paulo, Tarcisio de Freitas, an ally of Bolsonaro.
The Brazilian state owns a 37% stake in Petrobras, a company with a $69 billion market valuation
and a pillar of the Brazilian commodity economy. Lula criticized Petrobras during his campaign
for charging international market rates to Brazilian customers. He also said while campaigning for
the presidency that he would change the PB strategy implemented under Bolsonaro. Bolsonaro
divested the PB national network of consumer petrol stations and concentrated on drilling oil in
the Atlantic Ocean off the coast of Rio de Janeiro. Lula said he would invest in PB’s oil refining
capabilities and aggressively invest in renewables and sugar cane-based biofuels, technologies,
processes, and products. Brazilians invented sugar cane-based biofuels in the 1990s.
The Financial Times reported that Petrobras investors are wary of Lula. Under the leadership of
Lula’s Workers’ party successor, President Dilma Rousseff, Petrobras leaders and many members
of her cabinet and Congress were implicated in the massive Car Wash corruption scandal.
Petrobras also sold below international market rates in Brazil during the Dilma presidency, which
contributed to heavy corporate indebtedness. The increase in global oil prices in 2002 has returned
Petrobras to high profits and investor dividends. The FT reported that Petrobras stock prices are
down about 20% since Lula defeated Bolsonaro in October.
The Financial Times reported on 16 November 2022 that President-elect Lula at the United
Nations COP27 climate summit held in Sharm el-Sheikh, Egypt, vowed in an address that he will
aggressively enforce Brazilian laws in Amazonia against deforestation and will create a ministry
to represent the interests of indigenous people. Lula proposed to the UN that Brazil host the COP30
climate summit in Amazonia. Deforestation surged under President Bolsonaro in Amazonia, the
region in the Brazilian north that accounts for 60% of the world’s rainforests. Bolsonaro did not
attend COP summits during his presidency. Lula declared “Brazil is back” in the global climate
change fight in his address to the COP27 attendees.
The governments of Germany and Norway announced after Lula’s address at the summit that they
will restart multi-million dollar Amazon Fund payments to Brazil after Lula assumes the
presidency on 1 January 2023. The Amazon Fund suspended payments to Brazil during the
Bolsonaro administration.
The Financial Times reported on 31 October 2022 that Lula defeated Bolsonaro by less than two
percent of the national vote. “The tight result on Sunday completes a dramatic comeback for Lula,
who was president for two terms between 2003 and 2010 but then was subsequently accused of
corruption.” Lula said in his victory speech, “From January 2023, I will govern for 215 million
Brazilians, not just those who voted for me. We are one people, one country, one great nation.”
A political scientist noted that Lula will face the big challenge to deal with the big numbers of
voters and interest groups that voted against him and for Bolsonaro. Lula voters tended to cluster
in the working class and poor neighborhoods in huge-population industrial Sao Paulo, in unionized
mining and oil production areas, and in the indigenous communities in Amazonia. Bolsonaro
voters tended to cluster in small cities and rural agricultural regions in the south and west of Brazil.
? You are an analyst in the energy investments unit at Blackrock. Your boss asks you to
provide the team with an analysis of apparent energy policy and climate diplomacy change
that President Lula will bring in 2023 to Brazil. She asks that you explain how Lula’s party
politics, his publicly known intention to retire after one term and to get his new finance
minister, Fernando Haddad, elected president in 2026, and his climate logic may fit
together. She says to you: “Investors have driven down stock prices in Brazil because they
only see Car Wash Dilma. But I think we are forgetting that Lula when he was president
pursued orthodox monetary policy, greatly increased commodity exports, and hosted the
World Cup and the Olympic Games in Rio. Maybe we are all missing the strategy. Figure
out if you see one. We may have some opportunities in his first year to buy low.”
Question 3.
The Financial Times reported on 31 October 2022 that at the Chinese Communist Party Congress
Xi Jinping led onto the stage in a ceremony at Beijing’s Great Hall of the People the six men who
would join him on the Standing Committee of the Politburo. “It was no surprise that Xi emerged
at the front of the pack, confirming what has been an open secret since the last congress five years
ago—that he would break with recent convention and take a third term as leader [CCP general
secretary]….Xi’s rivals, potential and real, were forced out…, with loyalists taking their place. No
fewer than three of Xi’s aides from his previous positions in Beijing and other provinces were
promoted to the top team.”
Nearly a month later, the Financial Times reported on 28 November 2022 that global stocks fell
sharply after protests in China against the government’s strict Covid-19 policies prompted investor
worry over the outlook for the world’s second-largest economy. Demonstrations broke out in
Beijing, Shanghai, and other cities over the weekend. A Barclays analyst said, “China reopening
hope [the end of Covid lockdowns] was part of the bullish end-of-year narrative. Investors now
realize that whatever the direction of travel is on zero-Covid, it won’t be a smooth process.”
The Financial Times reported on 27 November 2022 that “protests brought together a broad
coalition of interests: factory workers, shopkeepers, students and urban elites, all of whom have
suffered under zero-Covid in different ways—from losing wages to foregoing international travel.”
The Financial Times reported on 30 November 2022 that students at Beijing’s Tsinghua University
gathered last weekend to “vent their fury at China’s zero-Covid policies.” A student at the
Tsinghua protest said, “Because of the lockdowns, the economy stagnated, and my family’s
financial situation also deteriorated. If the economic situation is poor, it may be difficult for my
parents to pay for my study abroad. The Covid policy will affect my future choices.” Youth
unemployment hit 20% in July after the Shanghai lockdowns and remains close to that level.
The Financial Times reported on 27 November 2022 that Xi Jinping, then China’s vice president,
told Joe Biden, then US vice president, in 2011 that the “Arab Spring” that roiled North Africa and
the Middle East that year happened because “leaders across the region lost touch with their
people.” “A decade later, and less than six weeks after Xi coasted to a third term as head of the
Chinese Communist Party and military, the president is in a quandary after repeating their
mistake.” “Does Xi crack down on the nationwide protests that erupted against his administration’s
‘zero-Covid’ policy over the weekend, risking an even bigger popular backlash? Or does he relent
and soften coronavirus controls, potentially unleashing an ‘exit wave’ of cases that could kill
hundreds of thousands—if not millions—of elderly citizens over the coming winter?” Reports
from Beijing and Wuhan, where the Covid epidemic began, said that some fences had come down
and there were other signs of a relaxation of the zero-Covid lockdown policy.
The Financial Times report of 31 October 2022 of the composition of the new Politburo Standing
Committee noted that Li Qiang, who likely will be the new Premier or Prime Minister in Xi’s
government in 2023, was the Shanghai party chief and managed the zero-Covid policy, the
lockdown policy, and the lockdowns in particular in Shanghai. The Financial Times reported on 7
December 2022 that the government has relaxed lockdown rules in the country. However, Chinese
and foreign business travelers in China report city by city differences in implementation of zeroCovid rules, including traveler quarantines and documentation to enter cities. City administrators
were incented by the government throughout the pandemic era to ensure zero cases.
The Financial Times reported on 5 December 2022 that revenues at Foxconn, Apple’s biggest
manufacturing partner, fell sharply by 20% year-on-year in November, the first decline November
pre-Christmas decline in 12 years. A Covid outbreak among the workers at Foxconn’s big
Zhengzhou significantly reduced iPhone production. The Financial Times reported on 10
December 2020 that Mango, the Catalan-based fashion retailer with 2600 stores around the world,
has 262 factories in China among about a 1000 factories worldwide. “During the pandemic, the
company was in a constant scramble, dialing production up and down across Asia as Covid-19
outbreaks flared and faded in China, Vietnam, Bangladesh, and India. The zero-Covid lockdown
policies have been a specific issue for Mango managers, among other challenges.
The Financial Times reported on 10 December 2022 that Chinese policymakers are aware that
rolling back the zero-Covid policy risks a “winter wave” that overwhelms the health system and
yields a million deaths. Under that scenario, Wigram Capital Advisors estimate that the 20,000
Covid deaths in China in March 2022 will peak at about 200,000 deaths in March 2023.
“The political fallout could be intense. Xi has been hailed by the state media as the ‘commanderin-chief of the people’s war against Covid’. He has boasted that China’s response to the
pandemic—which has kept officially reported total deaths down to the very low number of 5,235
deaths—demonstrated the ‘superiority’ of the country’s system.” Beijing failed to use three years
of controlling the population to ensure complete vaccination coverage of the population. About 85
million people remain either unvaccinated or insufficiently vaccinated against the Omicron
variant. “It has also prevented the import of foreign mRNA vaccines, which are known to be much
more effective than the homegrown variety that China has been administering.” Furthermore, fever
reducing medicines, such as ibuprofen, are in short supply.
? You an analyst at Blackstone. Your boss says to you: “Xi didn’t see these Covid lockdown protests
coming. It appears he was focused on his Communist Party Congress politics. It looks like the
Covid situation in 2023 will be a big problem across China for our invested companies that produce
and source their supply chains. I am organizing a team to investigate supply chain implications for
our invested companies. I want you to do something different—not supply chain analysis. You are
from Georgetown. Write us an analysis of Covid politics and government in China in 2023.”
Question 4.
The Financial Times reported on 7 November 2022 that United Nations Secretary-General
Antonio Guterres in his address to open the COP27 climate summit in Sharm el-Sheikh, Egypt, called
for a new “climate solidarity pact” in which rich countries help poorer nations with financial support to
implement climate transition policies. He specifically called on the United States and China as countries
with “particular responsibility” to act with financial assistance to developing countries. However, President
Xi Jinping did not attend the COP27 summit, nor did Narendra Modi of India or Justin Trudeau of Canada.
US President Joe Biden did attend COP27 as did the heads of state of France, Germany, the United Kingdom
and the president of the European Union.
The Financial Times reported on 12 February 2022 that the Glasgow Climate Pact at the COP26
summit delivered broad agreements from 196 countries in four key areas: coal, carbon markets,
financial support for developing countries, and national climate targets. The agreement keeps alive
the Paris accord goal to limit global warming since pre-industrial times to 1.5C. Yet, for example,
coal use is “surging” in some countries. Rich countries agreed at COP26 in Glasgow to provide
$8.5 billion to South Africa to eliminate the use of coal-fired electricity.
The Financial Times reported on 14 November 2022 that there was “relief” among diplomats and
climate experts that President Joe Biden and President Xi Jinping agreed at their meeting to restart
climate negotiations. They agreed that each of them would “empower key senior officials to
maintain communication and deepen constructive efforts.” Nevertheless, the Financial Times
reported on COP27 diplomats and climate experts expressed concern that some developing country
leaders forcefully demanded the right to increase fossil-fuel usage to improve their energy supplies
and promote their economic development opportunities. “Don’t tell African they can’t use their
own resources,” wrote Nigerian President Muhammad Buhari. “We are not the problem.” He
argued that if Africans used all known natural gas reserves that the continent’s share of global
emissions would still only rise from 3% to 3.5%. The Financial Times reported on 11 December
2022 that the COP27 climate summit marked the first time that oil and gas companies were invited
to participate in the official program of events. Diplomats and climate experts were taken aback
by the statement of Adel Al-Jubeir, Saudi minister of foreign affairs, that the effort to limit global
warming was not a “a discussion about fossil fuels.” Climate campaign group Global Witness
estimated that more 600 fossil fuel lobbyists were registered for COP27. The United Arab Emirates
(UAE), the “petrostate” that will host COP28 in 2023, brought the largest delegation to COP27 of
any country—70 official delegates. Stuart Jones, president of corporate affairs at American
construction and engineering giant Bechtel and former US ambassador to Iraq, told the COP27
audience that the integrated oil and gas companies “have an important role to play in
decarbonization and reducing emissions.” Climate activists criticized the Egyptian government
hosts for the presence of hundreds of oil and gas company participants in the summit. The
delegation from Uganda met with oil industry representatives to discuss potential oil exploration.
The Ugandan delegation also signed a memo of understanding with HDF Energy of France to
develop the country’s first hydrogen plan. The EU signed MOUs to develop green hydrogen with
Egypt, with Namibia, and with Kazakhstan, an agreement that also included batteries and raw
The Financial Times reported on 14 November 2022: “After days of fraught negotiations, almost
200 countries agreed to set up a development fund to help ‘vulnerable’ nations suffering from
climate change—but they did not reach a deal on phasing down the use of all fossil fuels, following
strong opposition from some countries, including Saudi Arabia and Russia. COP27 President
Sameh Shoukry of host Egypt was praised and receive a standing ovation from the delegates for
delivering the development fund as a significant tangible outcome of the climate summit.
? You are an analyst in the energy investments unit at Blackrock. Your boss says to you:
“The global situation looked bad going into the COP27 meetings. The Chinese weren’t
talking with the Americans. The Russian war in Ukraine turned the world upside down.
The Europeans are desperate for more coal, oil, and gas this winter. It looked for a while
in Sharm el-Sheikh that nothing at all was going get done. Yet, in fact COP27 turned out
to be really consequential. Maybe it wasn’t all good and maybe it wasn’t enough, but lots
of people were there and a lot got done. We need to take stock as part of our 2023 strategic
planning. Please write an analysis of the COP27 summit that tells us who the stakeholders
are and give us some kind of framework to help us explain what did happen.
COP27 (From Slides)
Themes from previous summit:
Many larger western countries not fulfilling promises to help fund developing nations switch to more
renewable sources of energy
US Plan: harness cash from world’s largest countries to help developing countries cut their usage
of fossil fuels
? Regional govt’s and state bodies would earn carbon credits (independently and
impartially certified) by reducing respective power sector’s emission
? Potentially could unlock tens of billions of private capital to fund transition esp. In
emerging economies
? Outcomes: recognition of the need for a robust global climate observing
system, for systematic observations and for universal access to early
? + Canada rallied together with developed and developing nations to
establish new funding arrangements for assisting developing countries that
are particularly vulnerable to the adverse effects of climate change,
including to establish a fund for responding to loss and damage.
1. Fundamental distinction between norms/principles and rules/procedures
? Solving the Tragedy of the Commons is a norm in place, while COP27 represents
the set of rules enacted towards reaching this norm
? Changes in norms = change in regime (i.e. wanting to solve global climate
? Changes in rules = changes within regime (i.e. the organizations in place to reach
the accepted norm)
2. COP27 = Epistemic Community = Shared set of norms / beliefs, common goal of
enhancing human welfare
? Relies / pulls from different logics (motivated by different practical interests)
? State logic (some governments, some NGOs)
? Professional logic (scientists)
? Market logic (business, some governments)
? Community logic (some NGOs, some governments)
3. Pooled logics, identified drivers of logic change, assembled climate change community:
How to implement/how has climate change logic been implemented?
a. COP 23 (2017): Member govts made voluntary pledges in Paris, 2015 to reduce
greenhouse gas emissions – scientists agreed that these goals were inadequate
i. Created a set of rules for determining progress
Seek common measures of outcomes in prep for future conferences
iii. Involvement from China and India, who realized domestic climate
change issue
b. Logic can be implemented by collective action revolving around the same set of
rules, same set of goals, involvement at national all the way down to
corporation/individual entity level
4. COP27 seeks to build on the relative progress (or lack thereof) of the fight against
climate change in recent years: New strategy – wealthy nations pooling resources to
help developing countries switch/implement renewable/clean sources of energy
? Little checks on government power, Presidents dominate for decades/ history of little
successful opposition to their government
? Extraction strategies (colonies): Few checks on government. The extraction strategies
are more self-serving and worse for the colony itself. The people who settled did not care
about setting them up for the future, those impacts are visible today.
? Settlement strategies: Have better but not excellent political strategies, property rights.
Settlement colonies come and develop roots ? impact on long term establishment of
those institutions (better rule of law, legal enforcement)
Nature of relationship between colonizer and colony important for establishment of institutions.
Neo-patrimonialism – chief exec maintains authority through personal patronage rather than
ideology or laws. Right to rule ascribed to a person rather than an office
? patronage= political rules will allocate benefits to get select groups of citizens’
political support. Rulers will deploy different patronage strategies based on what threats
to their power exist
–> Every African country has a constitution on paper, with limits on power, but in
practice these rules do little to constrain power
“Big Man” Paradigm – wants of individual men instead of institutions. The person holds the
power, not the office.
Semi-Democracies (part democracy part dictatorship) = minimal electoral standards for
legislatures and chief political executives; civil and political liberties insecure; political power
concentrated chief political executive. (patrimonial politics shouldnt work in semi-democracies
cus electoral votes show power in others)
[still some electoral standards]
Semi-Autocracies = possibly former military dictatorships; facades of elections; civil and
political rights severely restricted; press, political parties, and business enterprises controlled
Patronage politics wouldn’t work in semi democracies cus political parties are weak and instead
there is ethnic and tribal voting patterns
? Ethnically diverse societies are prone to corruption, political instability, poor
institutional performance, and slow economic growth…. Addressing ethnic divisions is
likely to be particularly important for Africa, the most ethnically diverse and poorest
continent. (very different policies among the different ethnicities).
Future: possible institutional reform: promote power sharing but BAD because it
institutionalizes divisions among groups rather than bridging them.
More ethnic diversity ? more fundamental differences, harder it is to lead to mutual benefit
(norway – lack of diversity, easy)
Brazil: Brazil is more diversified, they have local economies as well as foreign money. They are
not in the dependencia/enclave category. They are regionally integrated. By contrast, more
dependent economies in Latin America exist.
Dependencia Thesis:
Global capitalism and state imperialism result in “export enclave syndrome”
? Large world power invests considerable capital into a developing, export un-reliant
economy based on its natural resources (usually a former colonizer)
? Large country thereby uses its political connections (i.e. through corruption) to win
legal/illegal economic favors (e.g. tax breaks), reducing the opportunity for actual
economic growth and reinvestment into the local economy — using resources without
corresponding growth benefit
? These countries then develop as “enclaves” — economy removed from the rest of the
region (e.g. through trade, regional integration) and instead reliant on foreign country’s
The point:
? With landed oligarchs and foreign capital controlling states in enclave economies,
development prospects (both growth and distribution) were limited
? However, more diversified economies some manageable global capital and
indigenous industry were in a much better position to promote economic growth
In an international context:
? On the whole, nationalist states of Asia have coped with globalization from a position of
relative strength, making concessions when necessary, but also taking advantage of
available opportunities.
? By contrast, indebted and dependent countries of Latin America have just as often
confronted globalization on bended knees
Democracy-Economic Growth Thesis
? Economic policy in democracies avoids risks
? economic policies in democracies tend to be more stable than economic policies in
non-democracies, so democracies produce more stable economic growth than do
? Democratic political leaders fear voters, so avoid risky economic policy changes.
? Voters in democracies penalize political leaders for economic volatility.
? Non-democratic political leaders embrace risky economic policies that voters would
? Non-democracies produce more economic volatility than democracies.
? They have a lot of central power but have certain power separations in local areas.
? They send out surveys to people in China asking questions to citizens, hyper-localized
questions. These scores are used to rank local town mayors against each other, they
receive funding accordingly.
? Fragmented Authoritarianism: Each town mayor is a dictator of that area, they call
? Local authoritarians are given incentives to do well. Centralized Meritocracy: You need
to prove you have the merit to be an autocrat.
? Chinese governments are more assessed on their economic performance and GDP
growth, not environment or individual liberty.
? Mao was very isolationist, when he died their trade opened
? Statist network capitalist: (statist economy: high level of government intervention in
economic matters) Centralized market economy. Lot of private ownership but also
government ownership and connections between governments in business.
– Lot of benefits to market economy, but CCP maintains much control over the
country as a source of measuring success, making sound decisions. Combine
benefits of an open market but also benefits of authoritarian rule. CCP has
unilateral power to shut down any business in China
? State capitalism is an economic system in which the state undertakes business and
commercial (i.e. for-profit) economic activity and where the means of production are
nationalized as state-owned enterprises.
Related Questions from Study Review Slide Deck:
Since the victory of Mao and the Communist people, businesses have been state-owned and controlled,
with their purpose being to serve the greater society. Why?
Upon the establishment of the People’s Republic of China in 1949, the country was still recovering from
the long devastation of war and underdevelopment. Since there was no privately organized or wealth
structure to onboard the needed rebuilding, the state-owned enterprises undertook these tasks.
How did Mao’s China establish the foundations of “statist economy” for modern China?
– Mao’s China established the framework for state-owned and state-run enterprise in the country.
Under his isolationist policies, the country was forced to be entirely self-sufficient, and all major
enterprise were in the hands of the government (ex. agriculture). Even after the country opened to
trade with other nations, many industries still remain centrally within the control of the nat’l gov’t
and the CCP.
– Local leaders are given local jurisdiction over their respective provinces, albeit still with
authoritarian powers.
– Rural enterprise: individual, urban enterprise: state-owned. Understand relationship
between the Chinese government and outside free-market capitalist entities such as stock
markets, trade partners, etc.
Why did Deng Xiaoping and the reformers reform the modern Chinese economy away from
“self-reliance” and economic isolationism toward the “Open Door”?
– The reformers reformed the Chinese economy for several reasons.
– Although economic growth was there, agricultural production increases were insufficient,
and there was heavy malnutrition (100 million starving)
– Accelerating technological capability gaps (US, Japan, South Korea)
– Mass living-standard unrest, national insecurity, easy revenue scarcity
How does “statist network capitalism” apply to doing business in China?
– State-led + entrepreneurial private capital accumulation
– State-owned industries
– Multinationals/FDI, stock market openness, Hong Kong international capital markets
– Guanxi business networks, not law and transparency:
– Allows executives to seek out connections and cultivate close personal relationships to
obtain resources or protection not otherwise available

Business managers join Communist Party; Chinese “crony capitalism” = party
How is bureaucratic governance deeply institutionalized into government in China?
– For over 1000 years, Chinese government has been fragmented and authority bureaucratized
– 4 municipalities, 24 provinces, 4 autonomous regions + Hong Kong, Taiwan
– Local governments have primary control over economic matters within jurisdictions,
since 1985 evaluated on the basis of GDP growth rather than other metrics
How are the CCP and the state related in China?
– Essentially, the CCP and the state go hand-in-hand. Especially under president Xi, it is nearly
impossible to distinguish between the CCP and the idea of a separately-controlled “state” in
China. The CCP is more than just an ideological/political party. Rather, it encompasses political
leaders, economic and industrial figures, as well as prominent business people and other
influential Chinese figures.
– The CCP:
– Limits the types of organizations that can exist
– Screens which individuals are elected or selected for political posts
– Monitors flow of information via media and internet
How is China’s polity coherently described as “fragmented”?
– China’s polity is best described by the “fragmented authoritarianism” model which lays out a few
key points.
– “The neg

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