Strait Talk

Taiwan’s 19.5 million eligible voters will be voting Jan. 13 in the most consequential presidential election in recent decades. 

The potential outcomes are many. In a worst-case scenario, it could lead to an escalation of ongoing tensions into conflict in the Taiwan Strait, a 110-mile wide waterway separating the island of Taiwan from the Asian continent. Most analysts don’t believe an escalation is imminent or inevitable, but it could result in a global political and economic crisis. Here’s why:

• Taiwan plays an outsized and strategic role in the geopolitical competition between the U.S. and China. Neither accepting nor rejecting China’s claim to sovereignty over Taiwan, the U.S. argues any evolution of cross-strait relations must be peaceful and supported by the people on both sides.

• The U.S. is committed to ensuring Taiwan has sufficient self-defense capacity to push back against military coercion, but it has not given Taiwan formal security guarantees. China pledges to prioritize peaceful means to achieve its goals but does not rule out military force.

• This ambiguity has ensured peace so far, yet the approach is coming under strain as distrust between the U.S. and China grows. 

• Meanwhile, China has been increasing military drills around the Taiwan Strait – crossing the sensitive median line that serves as the unofficial border separating the two sides. The U.S. has reported more incidents of dangerous maneuvers and harassment of its military planes by Chinese fighter jets over Taiwan Strait, which can accidentally lead to a direct military conflict between the two superpowers.

• Despite this, the U.S. and China downplay the risk of conflict as long as all sides respect each other’s “red lines.” For Beijing, that means any explicit challenge to its goal of achieving control of Taiwan. For Washington, it’s any effort to force a solution onto the people of Taiwan.

The fallout of a conflict would lead to rapid and significant western sanctions against and decoupling from the Chinese economy. Recent high-level engagement shows both the U.S. and China are trying to contain their differences and avoid misunderstandings and escalation.

In December 2023, our Insights team asked our community of engaged voters, TrendSpotters, about the reactions of colleges and universities to the October 7th attacks on Israel and the ongoing conflict between Israel and Hamas.

Engaged Americans across the aisle criticize college leaders for putting student safety at risk. Initial reaction to the events is very partisan in nature with Republicans focusing on what they perceive as double standards of institutions condemning other forms of racism but reticent to condemn antisemitism, while Democrats describing their feelings as “sadness” and noting the complicated nature of the Israel-Hamas conflict. What unites both sides is a strong conviction that universities have put student security and safety at risk – with inadequate and indecisive statements in response to the attacks on October 7th creating unsafe campus environments. 

Moving forward organizations can expect:

• Increasing attention and pressure from politicians on what is taught or not at public universities, especially leading up to the 2024 elections.

• Growing skepticism of wealthy donors with a strong perception that “money talks” expressed by both Democrats and Republicans. 

• A continued focus on cost. While there are many dividing lines on what colleges and universities should do in light of global current events, the high cost of college tuition remains the top concern for Democrats and Republicans alike. 

For more information, please reach out to insights@fgsglobal.com.

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​Canada has a long-standing foreign investment review tool focused on national security in the Investment Canada Act (ICA).

Recently, the Canadian government has been merging the concept of national security with that of economic security.  That was made explicit and official in renaming the team who administers the ICA as the Foreign Investment Review and Economic Security (FIRES) branch.

The Parliament of Canada is on the verge of passing into law an overhaul of the ICA, which will broaden the government’s powers to impose conditions on investments under active review, share information with allied agencies and negotiate undertakings, among other things. 

Here are four key recommendations from our new partners on the FGS Longview team in Canada for anyone contemplating investments into Canada, either greenfield or through acquisitions:

• It is never too early to start analyzing the potential national security risks of an investment and the possible mitigation measures to address them. Considered too late in the transaction process, mitigation measures can make a good deal unworkable.

• The trend by the government to be more transparent about national security reviews creates significant, new reputational risks for foreign investors and domestic targets alike. No business wants to be branded as a “national security risk,” or effectively “un-investable.”

• Government relations matters, but engaging with officials and decision-makers must be thoughtful and strategic.

• Navigating a “black box” process like the ICA requires insight, creative thinking and an openness to developing practical solutions for the government’s concerns.