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Posts published in “Weekly Digests”

Weekly Digest for February 4th to 10th 2019

Americas

This week in Venezuela was ‘aid-themed’. If a reader presumed an ‘aid-themed week’ was all about delivering aid to the poor and downtrodden of Venezuela, they would be surprised to find that this aid was all about political posturing. Indeed, the US-Brazilian-Columbian effort to drive aid into Venezuela is less about the actual aid, but more about forcing the army to choose between a riot and Maduro. While this strategy hasn’t paid off yet, the US seems to be doubling down on it by heavily publicizing the aid, offering sanctions relief and pardons to defecting military officials, and even getting into direct contact with the military. As of the writing of this digest, the aid is still blocked from entering the country by a strategically placed oil tanker operated by the Venezuelan military, but the situation is far from settled. As for Guaido himself, he seems to be preparing for a post-Maduro Venezuela more than anything, with the National Assembly passing a law detailing a political transition of power as well as Guaido announcing plans to liberalize the Venezuelan oil sector by removing the need for a controlling stake by PDVSA in any joint ventures.

Assorted Americas Headlines

  • World Bank critic David Malpass nominated by the US to head the international body.
  • 284,000 new manufacturing jobs were created in the US over 2018, the largest increase since 1997.
  • Russia will provide Cuba 43 Million$ in credit in order to develop its defense industry.
  • US confirms planned purchase of Israeli Iron Dome Systems

Europe

This week saw two interesting developments coming out of the European commission, one happening due to Franco-German influence and another despite it. First, the good news. (If you’re German.) The EC was poised to pass a regulation vesting Brussels itself with negotiating authority on any pipelines that originate from non-EU countries (See: Russia and Nordstream). However, a French-German compromise saw that regulation changed into granting the country that hosts the first interconnector the authority to negotiate such pipelines. (See: Germany and Nordstream). While this is an uncharacteristic decentralizing decision from the EC, it’s still managed to alienate Eastern European countries as well as the US who see Nordstream as a threat, given Russia would now be able to cut gas supplies to these nations without affecting nations further in-land like Germany.

On the other hand, the EC has blocked a merge of two major French and German rail companies, citing anti-trust measures. This is a major setback for their push to create a rail giant that can rival those of the US and China. It seems however that these two countries will not take this defeat sitting down, with them announcing that they will present plans to reform the EU’s antitrust rules within the next three months. It remains to be seen if France and Germany will get their way here as well.

Assorted Europe Headlines

  • Russian GDP grew by 2.3% in 2018, coming out of negative growth in the previous two years. However, this growth is primarily driven by the construction of large gas and oil projects; as well as Rosneft posting record profits.
  • Norwegian Intelligence accuses the Chinese government of using Huawei equipment to steal information
  • The French yellow vest movement has joined a protest by the General Confederation of Labor (CGT) for the first time.
  • Sweden’s stolen crown jewels found on top of a trash bin.
  • Macedonia now considered an ‘invitee’ to NATO, and is firmly on the path to accession.
  • German factory orders fell by 1.6% in December, despite projections expecting a small increase in orders.
  • The EC is about to revise Italy’s expected GDP growth from 1.2% to 0.2%; which would trigger another round of budgetary fights shall the revision come to pass. The IMF revised its growth projections from 1% to 0.6%.
  • The EC dropped its growth forecasts for the eurozone to 1.3 percent from 1.9 percent for 2019.
  • Moody’s upgraded Russia’s credit rating to Baa3 from Ba1, citing improved public finances and reduced risk from external shock.

East Asia

This week was a slow one from Asia, save some loud political events in Thailand. With elections scheduled on the 24th of March, the first since 2014, the King’s sister shook the country by announcing a bid for Prime Minister. Her bid was short-lived, as the King came out and condemned her attempt as unconstitutional, prompting the Princess to retract her bid. Given the Junta party that the Princess tried to run against is pro-Royalist, this is probably nothing more than an over-ambitious Royal that decided to test some boundaries. So this event is probably nothing more than a nice fancy factoid, but is still interesting to note given Thailand’s aversion to elections.

Assorted East Asia Headlines

  • Japanese, South Korean and Taiwanese manufacturing growth dropped to lowest level in two years.
  • South Korean exports decreased year on year for a second consecutive month.
  • Nikkei survey reports a 30 percent drop in sales in China and a 9 percent decline in net profits for Chinese companies, the first such drop in 2 years.
  • Nepal Telecom signed two agreements with China to expand its 4G LTE network. Thailand has also set plans in motion that would allow Huawei to test its 5G technology inside the country.
  • US-NK summit announced on the 27th and 28th of February
  • Japanese Navy cancelled a port call in South Korea, citing strained relations.

Middle East

As far as the Middle East goes, this week has also been quite slow, bar an interesting development out of Egypt. For those who follow the Israeli-Palestinian conflict regularly, being told that Egypt plays some role in Middle Eastern politics would be stating the obvious, but it bears mentioning that today’s Egypt is much more inward-facing than usual. This seems poised to change, as Egypt’s parliament is about to remove term limits on President Sisi, indicating their confidence that political stability will weather the move. While Egypt still is facing a huge array of economic problems, its macroeconomic indicators have improved due to the successful implementation of a 4-year IMF bailout program, and the political elite didn’t wait one second to capitalize on this new reality. This probably means that Egypt will start taking a more active role in its immediate region as time goes by, making today’s Egypt seem isolationist in comparison. Future digests will shine a brighter light on Egyptian activity, whether in the Mediterranean gas sector, local water politics, or even regional anti-Muslim Brotherhood efforts.


Assorted Middle East Headlines

  • Iran announced a successful test of a 1,200km cruise missile. Satellite images obtained by NPR, however, seem to point to a failed test.
  • Iran allocates an additional 1.5 billion$ from its National Development fund to Defense.
  • The head of the Iranian Expediency Council has criticized the European Special Purpose Vehicle as having too many preconditions related to money laundering attached. This development galvanized the hard-line politicians into opposing the FATF’s action plan.
  • The leaders of the Iranian and Iraqi central banks reached a deal on a payment mechanism denominated in dinars.
  • NYT reports a 50 percent increase in attacks by Israeli settlers on Palestinians, Palestinian property, as well as Israeli security forces over the past year.
  • A CNN investigation found that US weapons sold to the UAE and KSA ended up being sold at arms markets and in the hands of Salafi Terrorist groups.
  • WSJ reports that OPEC is seeking a formal pact with Russia. This seems to be another attempt to negotiate and implement controlled production drops to increase the price of oil. This is happening as anti-OPEC legislation is snaking its way through the US Legislature.
  • The Guardian reports that the ISIS leader Al Baghdadi has escaped a coup attempt. This is not confirmed.
  • The WSJ reports that the US set April as the Syria withdrawal deadline.
  • Russia plans to invest 14 billion$ in Pakistani Energy Infrastructure. 40% of Pakistani energy needs are met by natural gas.
  • Morocco withdraws from the Saudi-Led coalition in Yemen, a largely symbolic move.

Africa

  • French airforce strikes a convoy of Chadian rebels who crossed over from Libya; in a rare incident of direct involvement.
  • The US has suspended military assistance to Cameroon, citing human rights violations
  • EU Commissioner unveils plans to rebuild roads connecting Ethiopia to Eritrean ports, which have been neglected due to Ethiopian-Eritrean tensions.