Economic
World Bank Warns of Stagflation Risk, Cuts Global Growth Forecast to 2.9%
The World Bank sharply lowered its growth forecast for the global economy for this year, warning of several years of high inflation and tepid growth reminiscent of the stagflation of the 1970s. Citing the damage from the war in Ukraine and the Covid-19 pandemic, the bank said global growth is expected to slump to 2.9% in 2022 from 5.7% in 2021, significantly lower than its January forecast for 4.1% growth. Furthermore, growth is expected to hover around the reduced pace over 2023 and 2024 as the war disrupts human activity, investment and trade while governments withdraw fiscal and monetary support. “Several years of above-average inflation and below-average growth now seem likely,” David Malpass, president of World Bank Group, told reporters. “The risk from stagflation is considerable.” Mr. Malpass said recession will be hard to avoid for many countries as growth is hammered by the war in Ukraine, pandemic lockdowns in China and supply-chain disruptions. He urged policy makers to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality, he said.Click here to read…
UN warns of global food ‘catastrophe’
Up to 181 million people in 41 countries could be hit by severe food shortages this year due to the conflict in Ukraine and its impact on grain and fertilizer exports, according to a UN report. “Food should never be a luxury; it is a fundamental human right. And yet, this crisis may rapidly turn into a food catastrophe of global proportions,” the Crisis Response Group on Food, Energy and Finance report released on June 08 warned. According to the UN, the situation could deteriorate beyond 2022, with 19 million more people expected to face chronic undernourishment globally in 2023 if food exports from Russia and Ukraine continue to decline. “This year’s food crisis is about lack of access. Next year’s could be about lack of food,” UN Secretary-General Antonio Guterres said, adding that the number of severely food-insecure people has doubled in the past two years. Guterres has been involved in negotiations to resume shipments of grain from the Ukrainian port of Odessa. The UN, Russia and Turkey have also been cooperating to provide unimpeded access to global markets for Russian food and fertilizers. Click here to read…
WTO warns of ‘polycrisis’
Export restrictions are pushing up food prices and could further exacerbate the global “polycrisis,” World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala said at the opening of the 12th WTO ministerial conference in Geneva on June 12. According to the official, the world has “become more complex” since the last ministerial meeting back in 2017, given the lingering Covid-19 pandemic, Russia’s military operation in Ukraine and the ensuing food and energy crises. “This polycrisis… is really unprecedented. And what is very central to all of this is that no one country can solve this crisis on its own. This is the time that you need the world working together. You need global solidarity,” she said. Okonjo-Iweala drew attention to export controls, which, as she repeatedly stated, should be eased in order to avoid making an already dire situation worse. “You saw that in the 2008-2009 food crisis, just those kinds of actions [export controls] did lead to price spikes. In the food security declaration, our members are trying to speak about how they would try to restrain themselves from taking these kinds of actions. And this is a very important contribution that they can make to keep the price of food products from rising even higher,” she said. Click here to read…
US won’t ease Russia sanctions for grain deal – Politico
Washington will not support any agreement on the supply of stranded Ukrainian grain if it involves easing sanctions against Russia, Politico reported on Sunday, citing sources. According to the report, the UN is currently trying to broker a deal with Moscow to allow Ukraine to restart grain exports from ports in the Black Sea. UN Secretary General Antonio Guterres reportedly wants an agreement that would ensure both Ukrainian and Russian grain and fertilizer exports can safely reach foreign markets. However, an unnamed US official told the newspaper that Washington wouldn’t agree to a deal that lifted any economic pressure on the Kremlin. “Instead, the administration is planning to keep sending weapons to help Ukraine fight off Russian forces,” Politico reports. Republicans on Capitol Hill have also bristled at the Russian calls for sanctions relief. At the same time, US officials and global businesses are closely watching Moscow’s talks with the UN, as well as separate negotiations with Turkey, on allowing safe passage for Ukrainian grain to the world markets. Meanwhile, any deal to allow Ukraine to export grain ahead of the summer wheat harvest would be a major breakthrough, the report said. Click here to read…
U.S. gave investors ‘green light’ on blacklisted Chinese companies
Just ahead of a deadline June 03 for U.S. investors to cease trading in the stocks and bonds of companies officially linked to the Chinese military, the Washington agency charged with enforcing the ban quietly notified investors that they would not be punished for holding onto such securities. The move could be seen to undercut a key element of the investment ban first announced by Donald Trump days after he lost the November 2020 U.S. presidential election to Joe Biden. But it is unclear how many U.S. investors still held blacklisted companies’ securities in the final hours before the trading deadline arrived. Ali Burney, who advises companies on sanctions issues as a partner with U.S. law firm Steptoe & Johnson in Hong Kong, said some investors had reasons not to divest earlier but declined to elaborate. “Those voices might have been heard,” he said. The policy clarification came in the form of three entries added on June 1 to an online FAQ prepared by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) — two days before the investment ban took effect. Part of the new FAQ clarified that U.S. financial institutions could continue to handle trades for non-U.S. clients and dividend distributions for U.S. clients. Click here to read…
Beyond Sri Lanka, economic cyclone bears down on South Asia
Sri Lanka’s rapid descent into the economic abyss has shocked the world. As the country’s accessible foreign reserves dwindled to next to nothing and citizens suffered under acute shortages of fuel, food and medicine, the government last month “preemptively” defaulted on its international debt for the first time. But while the Indian Ocean island is the most desperate country, it is not alone. From the beaches of the Maldives to the mountains of Nepal, to the bustling streets of Pakistan, much of South Asia faces similar risks from shrinking forex coffers and surging global inflation. While countries around the world are feeling similar headwinds, South Asia is home to a particularly vulnerable cluster — one that is in focus this week as India’s central bank meets, a Maldivian bond matures, and Pakistan prepares its budget. South Asian nations have also rung up relatively hefty foreign debt, including significant amounts to China, which has courted them under what Indian and American foreign policy wonks refer to as the “string of pearls” strategy. The woes stem partly from factors beyond governments’ control, experts say. First, COVID-19 severely strained public finances. Then rising commodity prices amid the Ukraine war slammed South Asia’s net importers. Click here to read…
How the Fed and the Biden Administration Got Inflation Wrong
In recent weeks, top officials in the Biden administration and Federal Reserve have publicly conceded that they made mistakes in their handling of inflation. Behind their errors was a misreading of the economy. Advisers to President Biden and Fed officials worried the Covid-19 pandemic and related restrictions would bring similar consequences to the 2007-09 financial crisis: weak demand, slow growth, long periods of high unemployment and too-low inflation. So they applied the last playbook to the new crisis. The Fed redeployed low-interest-rate policies that it believed had been effective and generally benign, and promised not to pull back prematurely. Elected officials concluded they had relied too heavily on the Fed previously, and decided to spend more aggressively this time, starting with President Donald Trump and capped off with President Biden’s $1.9 trillion stimulus. Moreover, many Democrats saw their control of the White House and Congress as a rare opportunity to shift Washington’s priorities away from tax cuts favored by Republicans and toward expansive new social programs. But the pandemic economy turned out to be fundamentally different. While the financial crisis primarily dented demand by businesses and consumers, the pandemic undercut supply, resulting in persistent shortages of raw materials, container ships, workers, computer chips and more. Unemployment fell and inflation rebounded more quickly than policy makers expected—yet they stuck with the old playbook. That exacerbated the supply-and-demand mismatches and helped drive inflation up, reaching 8.6% in May, its highest in 40 years. Click here to read…
U.K. Unveils Brexit Bill to Change Northern Ireland’s Trade Status
The British government presented legislation June 13 that would allow it to tear up parts of its Brexit agreement with the European Union, stoking fears of a trade war and drawing condemnation from the trade bloc. U.K. Foreign Secretary Liz Truss said the legislation put before Parliament enables the government to unilaterally alter the terms of a 2019 deal with its European counterparts that placed a customs border within the U.K., between Britain and Northern Ireland. Maros Sefcovic, the European Commission vice president in charge of implementing the Brexit deal, said immediately after the bill’s publication that Brussels wouldn’t renegotiate the agreement and would likely take the U.K. government to EU courts over the decision. British Prime Minister Boris Johnson is looking to appease rebellious Brexit-supporting lawmakers in his ranks as the government wrestles with a souring economy. At the heart of the disagreement with the EU is one of Brexit’s thorniest problems. After the U.K. left the EU customs and regulatory bloc, seamless trade between the two entities ended. That presented a problem on the island of Ireland, where the sudden imposition of border checks between the Irish Republic, which is in the EU, and Northern Ireland risked inflaming sectarian tensions. Click here to read…
Some European Factories, Long Dependent on Cheap Russian Energy, Are Shutting Down
For decades, European industry relied on Russia to supply low-cost oil and natural gas that kept the continent’s factories humming. Now Europe’s industrial energy costs are soaring in the wake of Russia’s war on Ukraine, hobbling manufacturers’ ability to compete in the global marketplace. Factories are scrambling to find alternatives to Russian energy under threat that Moscow could abruptly turn off the gas spigot, bringing production to a halt. Europe’s producers of chemicals, fertilizer, steel and other energy-intensive goods have come under pressure over the last eight months as tensions with Russia climbed ahead of the February invasion. Some producers are shutting down in the face of competition from factories in the U.S., the Middle East and other regions where energy costs are much lower than in Europe. Natural-gas prices are now nearly three times higher in Europe than in the U.S. “Overall, the big concern for Europe is increasing imports and falling exports,” said Marco Mensink, director general of Cefic, Europe’s chemical-industry trade group. The conflict with Russia has Europe preparing to ration gas if Russian President Vladimir Putin shuts off supplies to the entire region. Russian state-owned natural-gas company Gazprom PJSC has already cut off Bulgaria, Finland and Poland after the countries refused to accede to a Kremlin decree demanding payment for gas in rubles. As of last year, Russia supplied about 40% of the European Union’s natural gas. Click here to read…
Yen falls to lowest level since 1998 as U.S. yields march higher
The yen tumbled to its lowest against the dollar in 24 years on June 13, as the gap between Japanese and U.S. benchmark yields widened after red hot U.S. inflation data drove U.S. Treasury yields higher. The dollar rose as high as 135.22 yen, its highest since October 1998, having gained for each of the past seven sessions, as the policy divergence between hawkish central banks overseas and the dovish Bank of Japan (BOJ) becomes ever more apparent. Central banks’ efforts to raise interest rates to curtail inflation will remain in focus this week. The Federal Reserve and the Bank of England are expected to raise rates at their meetings and there is a chance the Swiss National Bank will do the same. Little change is expected from the BOJ, however, which said on June 13 it would buy 500 billion yen ($3.70 billion) of Japanese government bonds on June 14 as part of its policy to keep benchmark 10-year yields within 0.25 percentage points of its 0% target. “For the yen, what could go wrong did go wrong, and continues to go wrong,” said Paul Mackel global head of FX research at HSBC, adding it was important to watch whether Japanese investors were prepared to take more unhedged currency risk in their portfolios. Click here to read…
China’s hostile environment for Western tech pushed out Amazon and Airbnb, but competition remains the biggest challenge
Just by the size of its economy and population, China has long stood as a market that global businesses cannot afford to ignore. Yet a string of recent exits, including Airbnb and Amazon, shows the country is increasingly becoming a cautionary tale for multinational firms. While economic reforms started almost half a century ago, a recently emergent middle class has made China even more appealing to many global firms seeking a toehold in the world’s second largest economy. Not even one of the strictest censorship regimes in the world has been enough to deter internet giants. Mark Zuckerberg, founder of Facebook owner Meta, was still courting favour with Chinese officials as recently as 2016, when he went for a highly publicised jog in Beijing through air thick with smog. Last month, Airbnb became the latest foreign internet service to exit China, saying it would continue to serve Chinese users when they travel abroad. Shortly after Airbnb’s announcement, Amazon said it was closing its Kindle business in the country, with the online e-bookstore to shutter by June 30, 2023. Not even footwear company Nike was spared from pulling its running app out of the country this month, as strict new data laws have made it more difficult to run such services.
China and India buy more Russian oil, blunting Western sanctions
China and India have increased Russian oil purchases as prices decline due to Western import bans, the latest data shows, creating a loophole that allows Moscow to secure export revenue. China imported 800,000 barrels of Russian petroleum daily by sea last month, according to data from Refinitiv, a figure that does not include oil delivered via pipelines. The volume has soared by more than 40% from January. The number indicates that China is deliberately going after cheap Russian crude. India’s marine imports of Russia’s oil also spiked from zero in January to nearly 700,000 barrels a day in May. China and India have expanded imports because “Western sanctions have reduced the number of buyers, meaning Russian crude oil can be purchased cheaply,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp., the state-backed energy explorer known as JOGMEC. Following similar action by the U.S., the European Union agreed to ban imports of Russian oil last week, immediately halting imports on two-thirds of the petroleum. The bloc plans to end roughly 90% of purchases by year’s end. More companies in Western economies are shying away from procuring Russian oil as well. As a result, Russia’s Urals crude, mostly bound for the European market, currently trades around $90 a barrel. In contrast, the Brent crude international benchmark sells about $35 higher. Click here to read…
China’s struggling private firms tasked with lifting nation of out economic doldrums
With China’s economic headwinds intensifying amid rising internal and external uncertainties, the country’s private sector has been tasked with rebooting the economy, despite having borne most of the pain of the current economic downturn. During last week’s Yabuli China Entrepreneurs Forum – one of the most influential idea-exchange platforms for business leaders in China – private firms were urged to “cultivate new opportunities in the midst of crisis” and “make positive contributions toward stabilising the country’s economy”. “Private entrepreneurs should further unify their thoughts and actions into the scientific judgment of the Party Central Committee on the current situation and the decision-making and deployment of economic work,” Qiu Xiaoping, vice-chairman of the All-China Federation of Industry and Commerce, a government-controlled business association, said at the opening ceremony of the annual forum held on June 10 and June 11 in Heilongjiang province. “[Private entrepreneurs] should make efforts to stabilise and expand employment positions … and play a better role as the main force in stabilising and securing the overall employment situation,” Qiu said. Since the second half of last year, private firms have been hit hard in the midst of regulatory crackdowns, rising commodity prices and repeated lockdowns under the country’s “dynamic zero-Covid” policy. In contrast, state-owned enterprises (SOEs) have remained largely intact, or have even thrived. Click here to read…
Explainer | What is on the agenda at the WTO’s 12th Ministerial Conference in Geneva?
The future of the World Trade Organization (WTO) will face a test of credibility during the four-day 12th Ministerial Conference (MC12), which starts on June 12 in Geneva. It takes place against the backdrop of the global coronavirus pandemic, rising food and energy prices, the protracted war in Ukraine, geopolitical tensions and the ongoing threat of climate change. Trade ministers from member countries are set to gather for the first time in four years, after the conference – originally scheduled for June 2020 in Nur-Sultan, Kazakhstan- was postponed twice due to the coronavirus. Any results from the conference will be seen as a vital answer to whether the multilateral institution can still be capable of agreeing on anything and whether consensus can be attained to reform its outdated laws and keep pace with global developments. The war in Ukraine adds another layer of complication to the already dysfunctional WTO as multiple members have revoked Moscow’s trading privileges and refused to negotiate agreements with Russian delegates. Agreement on ending subsidies for fisheries? According to insiders, a deal is set to be struck this time and a revised draft agreement exists for negotiation. The agreement, if passed by member states, will prohibit all except low-income countries from providing subsidies to overfished stocks and those that contribute to illegal and unregulated fishing and overfishing. Click here to read…
‘Shrinkflation’ hits consumers worldwide – AP
Global manufacturers have been quietly shrinking their products without lowering prices, the Associated Press reported on June 08. So-called “shrinkflation,” occurs when companies pass their costs on to customers, and the news agency claims it’s accelerating worldwide. In the US, a small box of Kleenex now has 60 tissues while a few months ago it had 65. The size of yogurts has also shrunk. In Britain, Nestle reduced its Nescafe Azera Americano coffee tins from 100 grams to 90 grams. In India, a bar of Vim dish soap has contracted from 155 grams to 135 grams. “It comes in waves. We happen to be in a tidal wave at the moment because of inflation,” consumer advocate and former assistant attorney general in Massachusetts Edgar Dworsky told AP. He has documented shrinkflation on his Consumer World website for decades. Dworsky began noticing smaller boxes in the cereal aisle last fall and says shrinkflation has ballooned since then. He claims the practice appeals to manufacturers because they know customers will notice price increases but won’t keep track of net weights or small details, like the number of sheets on a roll of toilet paper. According to him, companies also employ other tricks to draw attention away from downsizing, like marking smaller packages with bright new labels that draw shoppers’ eyes. Click here to read…
Strategic
DC shifts to damage control as Ukraine defense fades
Having made multiple declarations that Russia would cease to be a world power after the Ukraine war, President Biden and his top officials are now focused on damage control – warning Ukraine through proxies that it will have to sacrifice territory for a ceasefire. Speaking at a Democratic National Committee fundraiser in Los Angeles, Biden blamed Volodymyr Zelensky for allegedly not heeding American warnings about a Russian invasion: And, folks, nothing like this has happened since World War Two. I know a lot of people thought I was maybe exaggerating, but I knew — and we had data to sustain — he was going to go in, off the border. There was no doubt. And Zelenskyy didn’t want to hear it, nor did a lot of people. Understanding why they didn’t want to hear it. But he went in. Ukrainian officials angrily disputed Biden’s version of events, but the cat was out of the bag. That’s a turnabout from April 25, when Defense Secretary Lloyd Austin declared in Kyiv that the United States wanted to destroy Russia’s capacity to undertake wars on this scale: “We want to see Russia weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine. So it has already lost a lot of military capability. And a lot of its troops, quite frankly. And we want to see them not have the capability to very quickly reproduce that capability.” Click here to read…
Biden says he has ‘not yet’ decided on trip to Saudi Arabia
United States President Joe Biden says he has “not yet” decided if he will travel to Saudi Arabia, a week after he opened the door to a possible trip. The comment on June 11 came amid opposition to the possible trip from Democratic Party legislators and human rights groups. Unnamed US officials told local media last week that Biden was planning a trip to Saudi Arabia, along with a trip to Europe and Israel in late June. The visit would signal the most distinct departure to date from the Biden administration’s promise to “recalibrate” ties with longtime ally Saudi Arabia for alleged human rights abuses. Biden called Saudi Arabia’s Crown Prince Mohammed bin Salman a “pariah” for his role in the killing of a political opponent and US resident Jamal Khashoggi in Turkey in 2018. The Saudi government has denied any involvement of the crown prince. Asked by a reporter in Albuquerque, New Mexico on June 11 if he would use a possible trip to the Middle East to secure a deal to improve Saudi-Israeli relations, Biden said: “We’ll see.” Any potential visit to Saudi Arabia likely would be aimed at bolstering relations with the country at a time when Biden is trying to find ways to lower gasoline prices in the US. Click here to read…
US Congress proposes anti-Iran alliance
The US should support Israel and nine Arab countries in establishing an integrated air defense system to counter Iran, according to a proposal by 10 members of Congress from both parties made public this week. Dubbed the Deterring Enemy Forces and Enabling National Defenses (DEFEND) Act, the bill would authorize the Pentagon to cooperate with Israel, Bahrain, Egypt, Iraq, Kuwait, Jordan, Qatar, Oman, Saudi Arabia, and the United Arab Emirates to develop and deploy integrated air and missile defenses against the alleged threat posed by Iran. The bill enjoys the support of 10 lawmakers from both political parties. “US leadership, in developing integrated air and missile defense, would provide essential security, stability, and a unified defense to the region. The DEFEND Act is a prime example of the important, bipartisan, bicameral work that Congress must prioritize in our pursuit of regional peace and stability,” Rep. Schneider (D-Illinois) said in the announcement. All 10 lawmakers are members of the Abraham Accords Congressional Caucus, established earlier this year. One possible wrinkle in the plan is that Israel currently has formal ties with only half the countries that would be involved. It is also unclear whether any of the listed countries are on board with the effort, or if the US lawmakers even consulted them, according to the Times of Israel. Click here to read…
Iran pulls UN nuke cameras in possible ‘fatal blow’ to deal
Iran has started removing 27 surveillance cameras from nuclear sites across the country, the head of the U.N. atomic watchdog said June 09, warning this could deal a “fatal blow” to the tattered nuclear deal as Tehran enriches uranium closer than ever to weapons-grade levels. The development comes a day after the International Atomic Energy Agency’s board of governors censured Tehran for failing to provide “credible information” over man-made nuclear material found at three undeclared sites in the country. It also follows months of deadlocked over stalled talks aimed at restoring the Islamic Republic’s 2015 nuclear deal with world powers. Tensions remain high across the wider Middle East over the accord’s collapse as U.S. sanctions and rising global food prices choke Iran’s ailing economy, putting further pressure on its government and its people. “This, of course, poses a serious challenge to our ability to continue working there,” warned Rafael Mariano Grossi, the IAEA’s director-general. He added that if an agreement cannot be reached to restore the cameras in three to four weeks, “this would be a fatal blow” to Iran’s tattered nuclear deal. Already, Grossi warned that without the cameras, Iran could make centrifuges and divert them to unknown locations. Click here to read…
Turkey’s NATO wish list revealed by media
Turkey has presented Finland and Sweden with a list of ten requirements they must meet to secure Ankara’s support for their NATO membership bids, the Yeni Safak news outlet reported on June 08, citing documents it had obtained. While the Turkish government is yet to confirm the authenticity of this list, it corresponds to previous official statements from Ankara. Turkey has been opposing the accession of the two Nordic countries to the military alliance and describing Finland and Sweden as “guesthouses for terrorist organizations” due to them hosting members of Kurdish groups, such as the Kurdistan Workers’ Party (PKK), which is outlawed in Turkey. The list of demands, if it is confirmed to be genuine, shows that the terrorism-related concerns remain a key issue for Ankara as regards to Helsinki and Stockholm’s NATO bids. Seven out of ten demands are related to this matter. At the top of the list, Turkey reportedly asks Finland and Sweden to support it “in its fight against terrorist organizations,” including the PKK and the Fetullah Terrorist Organization (FETO), which is suspected of attempting a coup in Turkey in 2016, as well as their affiliates. Another condition on Ankara’s list is for Sweden and Finland to “establish the necessary legal regulations and legal framework for the fight against terrorism.” Click here to read…
U.S., China Defense Chiefs Dial Down Tensions Over Taiwan
U.S. Defense Secretary Lloyd Austin called on his Chinese counterpart to avoid destabilizing actions over Taiwan and said in their first face-to-face meeting that U.S. policy toward the island hadn’t changed. After a nearly one hour closed-door meeting on the sidelines of a defense conference in Singapore, both sides gave accounts that suggested an easing of tensions after President Biden said recently that the U.S. would intervene militarily to defend Taiwan if Beijing moved to seize the island. China reacted angrily to Mr. Biden’s comments, which were quickly rolled back by the White House. Mr. Biden later said there was no change to U.S. policy. Mr. Austin told Chinese Defense Minister Gen. Wei Fenghe in their June 10 meeting that the U.S. stance of recognizing but not endorsing China’s claim to Taiwan was unchanged, according to the U.S. account. The meeting was the first in-person exchange between top-level U.S. and Chinese officials since Mr. Biden made his comment about U.S. military intervention to support Taiwan during a visit to Asia in May. Chinese defense ministry spokesman Wu Qian said Gen. Wei told Mr. Austin that Taiwan is an inalienable part of China and its status quo can’t be changed. Both sides emphasized the need to keep open lines of communication to head off crises. Click here to read…
China insists it has sovereign rights over Taiwan Strait
China said on June 13 it has sovereign and administrative rights to the Taiwan Strait, denying US claims that the channel consists of international waters. Foreign ministry spokesman Wang Wenbin said the strait fell within China’s territorial waters and exclusive economic zone as defined by the United Nations Convention on the Law of the Sea (UNCLOS) and domestic law. “China enjoys sovereign rights and jurisdiction over the Taiwan Strait, while respecting the legitimate rights of other countries in the relevant maritime areas,” Wang said in Beijing. “There is no such thing as ‘international waters’ in UNCLOS. By claiming that the Taiwan Strait is international waters, some countries intend to create an excuse for its manipulation of the Taiwan issue and threaten China’s sovereignty and security.” According UNCLOS, countries can claim an area 12 nautical miles (22km) from the coast as their territorial seas, where they have full sovereignty. They can also claim waters up to 200 nautical miles from the coast as an exclusive economic zone, where they have a sovereign right to the water column and sea floor as well as resources, but other countries still have the right to sail through or fly over the waters. Wang made his comments in response to reports that Chinese military officials have repeatedly told their US counterparts the Taiwan Strait – which is 220 nautical miles at its widest part – is not international waters. Click here to read…
Australia, New Zealand unite on China’s Pacific threat
Australia’s prime minister said June 10 after a meeting with his New Zealand counterpart that the two nations are in lockstep in their policies toward the Pacific islands, where China’s influence is growing. New Zealand Prime Minister Jacinda Ardern became the first foreign leader to visit Prime Minister Anthony Albanese in Australia since he was elected on May 21. Both lead center-left administrations and Ardern described the Albanese Labor Party’s election after almost a decade in opposition as a reset in the bilateral relationship. Australia, New Zealand and the United States have voiced concerns that a new Beijing security pact with the Solomon Islands could result in a Chinese military base being established there. The Solomons and China have both denied that that will happen. Asked if Australia wants New Zealand to do more to counter China’s rise in the Pacific, Albanese told reporters in Sydney: “We’re in lockstep on the Pacific.” “I look forward to working with Prime Minister Ardern, working with our democratic neighbors,” Albanese said. Albanese and his Foreign Minister Penny Wong flew to Tokyo within hours of being sworn into office for a meeting with U.S. President Joe Biden, Japanese Prime Minister Fumio Kishida and Indian Prime Minister Narendra Modi to discuss the regional security threat posed by China. Click here to read…
World headed for new era of nuclear rearmament, SIPRI says
The number of nuclear weapons in the world is set to rise in the coming decade after 35 years of decline as global tensions flare amid Russia’s war in Ukraine, researchers said June 13. The nine nuclear powers – Britain, China, France, India, Israel, North Korea, Pakistan, the United States and Russia – had 12,705 nuclear warheads in early 2022, or 375 fewer than in early 2021, according to estimates by the Stockholm International Peace Research Institute (SIPRI). The number has come down from a high of more than 70,000 in 1986, as the US and Russia have gradually reduced their massive arsenals built up during the Cold War. But this era of disarmament appears to be coming to an end and the risk of a nuclear escalation is now at its highest point in the post-Cold War period, SIPRI researchers said. “Soon, we’re going to get to the point where, for the first time since the end of the Cold War, the global number of nuclear weapons in the world could start increasing for the first time”, Matt Korda, one of the co-authors of the report, said. “That is really kind of dangerous territory.” After a “marginal” decrease seen last year, “nuclear arsenals are expected to grow over the coming decade”, SIPRI said. Click here to read…
Why China is likely to focus more on Central Asia as US rivalry intensifies
China will step up engagement with Central Asia as part of efforts to stabilize its western border and focus on its strategic rivalry with the U.S. in the Indo-Pacific, according to observers. This came as Chinese Foreign Minister Wang Yi wrapped up a four-day visit to Kazakhstan, where he met President Kassym-Jomart Tokayev and held separate meetings with his counterparts from Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan, as well as the transport minister of Tajikistan. He also attended a summit in the Kazakh capital of Nur-Sultan with ministers from the five Central Asian nations, all former Soviet republics with close ties to Moscow. The meeting ended with pledges of greater cooperation in areas ranging from anti-terrorism, security and humanitarian mediation in neighboring Afghanistan to energy supplies, transport links, infrastructure, data security and vaccine production. The week before, Beijing had suffered a setback in its plans for a sweeping trade and security deal with 10 nations in the South Pacific, with some of them raising objections despite Wang’s whirlwind tour of a region that has increasingly emerged as a front line in the China-U.S. geopolitical rivalry. “Given that Beijing needs stability on its western borders so it can focus on its strategic rivalry with the U.S. in the Indo-Pacific, we should expect more involvement from China in this regard,” Srdjan Uljevic, an associate professor with the American University of Central Asia said.Click here to read…
Iran, Venezuela sign 20-year deal
Iran and Venezuela signed a 20-year deal on cooperation between the two allies subject to US sanctions during a visit June 11 to the Islamic republic by Venezuelan President Nicolas Maduro. The inking of the agreement “shows the determination of the high-level officials of the two countries for development of relations in different fields,” Iranian President Ebrahim Raisi said. Maduro, speaking at a joint news conference in Tehran, said the cooperation covered the energy and financial sectors, as well as “work together on defense projects.” Maduro also met Iran’s supreme leader Ayatollah Ali Khamenei, who said that “resistance” is the way to confront US pressure. “The conclusion that can be drawn from the resistance and success of the two nations of Iran and Venezuela is that the only way against pressure is to stand and resist,” Khamenei said. Khamenei welcomed the agreement and called for “stronger” cooperation between Tehran and Caracas, according to a statement on his official website. “The Islamic Republic of Iran has shown that it takes risks in times of danger and takes the hands of its friends,” he added. Alongside the likes of Russia, China, Cuba and Turkey, Iran is one of Venezuela’s main allies. And like Venezuela, it is subject to tough US sanctions. Click here to read…
Elections see left challenge to Macron
France began voting in the first round of parliamentary elections on June 12, with a resurgent and newly unified left seeking to thwart President Emmanuel Macron’s plans for reform. Elections for the 577 seats in the lower house National Assembly are a two-round process, with the shape of the new parliament becoming clear only after the second round on June 19. The ballots provide a crucial coda to April’s presidential election, when Macron won a second term and pledged a transformative new era after a first mandate dominated by protests, the coronavirus pandemic and the Russia-Ukraine crisis. Polls opened at 8 am (0600 GMT) in mainland France, after voters in overseas territories cast ballots earlier in the weekend. After a dismal performance in April, the French left has united in a coalition for what its leader Jean-Luc Melenchon dubs “the third round” of the presidential elections. Opinion polls show the president’s centrist alliance, Ensemble (Together), and Melenchon’s NUPES coalition of hard left, Socialists, Communists and Greens neck-and-neck in the popular vote. But France’s constituency-based parliamentary system and the two-round election means that the seat breakdown will be another matter, and much will depend on turnout in the second round. If the president’s alliance retains an overall majority, Macron will be able to carry on governing as before. Falling short could prompt messy bill-by-bill deals with right-wing parties in parliament or an unwanted cabinet reshuffle. Click here to read…
Boris Johnson scrapes no-confidence win
British Prime Minister Boris Johnson survived a confidence vote on June 13 but a large rebellion in his Conservative Party over the so-called “partygate” scandal dealt a blow to his authority and leaves him with a struggle to win back support. Johnson, who scored a sweeping election victory in 2019, has been under increasing pressure after he and staff held alcohol-fueled parties in his Downing Street office and residence when Britain was under lockdowns to tackle the COVID-19 pandemic. The vote was a blow to Johnson, with 41 percent of his lawmakers casting ballots against his leadership after months of scandals and gaffes that has raised questions over his authority to govern Britain and knocked his standing among the public. But Johnson, a master of political comebacks, instead described the vote as a “decisive result” meaning that “as a government we can move on and focus on the stuff that I think really matters to people.” Several lawmakers said the vote, which saw 211 lawmakers cast ballots in favor of Johnson against 148, was worse than expected for a prime minister, once seemingly unassailable after winning the Conservatives’ largest majority in more than three decades. Click here to read…
Israel issues highest travel warning for Istanbul, citing possible attacks by Iran
Israel’s National Security Council raised its travel warning for Istanbul, Turkey’s largest city, to the highest level, citing possible attacks by Iran, said a statement from the council on June 13. The warning comes amid the latest surge in tensions between Iran and Israel. “Given the continuing nature of the threat and in light of the increased Iranian intentions to attack Israelis in Turkey, especially Istanbul, the National Security Council has raised the travel warning for Istanbul to the highest level, Level 4,” said the statement. The council called on Israelis currently in Istanbul to leave the city and Israelis planning to travel to Turkey to avoid doing so until further notice. The statement noted that other areas in Turkey are under a Level-3, or intermediate travel warning, advising Israelis to avoid “non-essential travel” to the areas. Hours before the statement was issued, Israeli Foreign Minister Yair Lapid called on Israelis in Turkey to leave the country as soon as possible and others to cancel planned visits, adding the warning followed “a situation assessment” that had found out attempts by “Iranian forces” to kidnap or kill Israeli nationals in Turkey. Israeli officials on June 12 said Turkish authorities had thwarted an “Iranian plot” to attack Israelis in Turkey last month. Iran did not immediately comment on the allegations. Click here to read…
US lawmakers reach deal on gun control
Members of the US Senate have announced an agreement on a bipartisan deal that could mark the nation’s most significant gun control legislation in three decades. The news comes as lawmakers are facing increasing pressure to find ways to reduce gun violence amid a series of mass shootings. The legislation will include funding to help states implement ‘red flag’ laws, which enable police to take weapons away from people who are deemed to pose a risk to others or themselves, Senator Chris Murphy (D-Connecticut), one of the lead negotiators, said on June 12. It also will feature billions of dollars in new funding for mental health services, including a nationwide network of clinics, as well as school safety initiatives. Senator John Cornyn (R-Texas) was lead negotiator on the deal for the GOP side of the aisle. “Today, we are announcing a commonsense, bipartisan proposal to protect America’s children, keep our schools safe, and reduce the threat of violence across our country,” Cornyn, Murphy and other senators involved in the talks said in a joint statement. The Democrat-controlled House passed gun legislation last week, riding the momentum created by mass shootings in Buffalo, New York, and Uvalde, Texas. However, Republicans were expected to block such bills from clearing the Senate, where a 60-40 vote is required to prevent new laws from being blocked by the minority party. Click here to read…
DRC, Rwanda accuse each other of fresh cross-border rocket fire
Democratic Republic of Congo (DRC) and Rwanda have accused each other of firing rockets across their shared border, including a strike that killed two Congolese children, a spokesperson for the Congolese army said. The alleged cross-border rocket attacks on June 10 are part of an escalating dispute between the Central African neighbours and are linked to a fresh offensive by the M23 rebel group that Congo has accused Rwanda of supporting. “We recorded two children killed and one seriously wounded and also a school which was thoroughly damaged,” Congolese Army spokesperson Guillaume Ndjike Kaiko said on June 10. The incident occurred as Congolese troops battled M23 rebels in a mountain area close to the border with Rwanda and Uganda when five rockets fired from Rwanda landed in Congolese territory, the spokesperson said. Rwandan authorities did not immediately respond to a request for comment and the Reuters news agency could not independently verify the reported rocket attack. The Rwandan Defence Ministry also accused Congolese forces of firing two 122mm calibre rockets into Rwanda from the Bunagana area, where Congolese force were battling M23 rebels. Kaiko denied that Congolese forces had used rockets of that calibre in the area. Click here to read…
Health
US experts recommend Novavax vaccine
A panel of experts convened by the US drug regulator on June 07 recommended the Novavax COVID-19 shot, a late runner in the fight against the virus that could nonetheless play a role in overcoming vaccine hesitancy. Three vaccines are currently approved in the US: Pfizer and Moderna, which are based on messenger RNA, and Johnson and Johnson, which recently received a recommendation against broad use because of links to a serious form of clotting. Experts voted 21 in favor of the Novavax vaccine, with none against, and one abstention, despite some concerns it may be linked to rare cases of heart inflammation. The Food and Drug Administration, which called the meeting, is expected to issue an emergency use authorization soon. Then another agency, the Centers for Disease Control and Prevention, will weigh in with guidance on how it should best be used. Maryland-based Novavax was an early frontrunner in the global vaccine race, but fell behind after being hit by manufacturing and regulatory delays. The US was one of the few major markets where it hasn’t yet received authorization, while the EU, UK, Canada, Australia are among many that have already given it the green light. Officials hope that the shot, which is based on lab-grown viral proteins, could provide an alternative for people still hesitant of the mRNA technology. It also doesn’t have the same cold storage requirements as Pfizer and Moderna’s shots. Click here to read…
What next for China’s zero-Covid policy after Shanghai lockdown?
A few days after Shanghai lifted its two-month lockdown, the city went on high alert after recording a handful of Covid-19 cases spread via community transmission. To prevent another full-scale lockdown, the financial powerhouse is now banking on regular nucleic acid testing, sophisticated contact tracing – based on surveillance technologies and big data – and prompt, highly localised lockdowns when infections are found. There have been subtle changes to China’s zero-Covid policy, with the aim now to scoop up positive cases and their close contacts, and quarantine them as soon as possible to maintain zero-Covid in non-quarantine zones. The Chinese authorities call the revised strategy “zero-Covid at the community level” and this refined approach appears to have helped Beijing avoid a citywide lockdown as well as enabling Shanghai to reopen, even as cases remained in its quarantined areas. However, experts warn that a reliance on mass testing to curb Covid-19 transmission is unsustainable, both epidemiologically and financially, and may divert resources from better long-term strategies. Chen Xi, an associate professor with the Yale School of Public Health, said the strategy may hold off the virus for a while but is hardly sustainable. “It may work in the short term to buy time to narrow the large immunity gap for the Chinese older population, improving short-staffed health infrastructure, etc,” he said. Click here to read…
