Protests are continuing today into their fourth week, despite the government of Macron conceding and completely canceling the gas tax hike and promising to ‘look into’ the tax cut for the wealthy his administration implemented earlier. A labor union is supposed to join today’s protests in a couple of hours, but so far, turnout is underwhelming and police is being incredibly strict.
Another wild week for the United Kingdom, with Theresa May’s government being found in contempt of parliament for refusing to release the AG’s advice. This is the first time in the country’s modern history this happens. However, more interesting headlines were buried under this ‘interesting factoid’ that further underline that these talks are not cordial. Airbus has blamed the EU for the UK’s exit from the military side of Galileo, which the UK has left due to fears it would not be able to influence this program outside the EU. Furthermore, in another development, Italy and the Netherlands have joined the British fighter project ‘Tempest’, while Spain has joined the Franco-German project. That is two headlines in a week pointing to military fragmentation in the EU, as one of the two major military powers is poised to leave it.
The Balkans?! Again?!
Yes, again! The Balkans are in the headlines this week, and it seems everyone is worried! The Kosovar parliament is set to confirm an earlier vote to create a Kosovar army from the 4,000 strong security force. While practically, this might not change much, this is still an aggressive step towards independence. A senior NATO official has called this ‘ill-timed’, while Russia has also condemned this move. What’s interesting to note, however, is that the support of the US Ambassador to Kosovo has initiated this move by the country’s government. Is the US opening another front against Russia, or was this simply a slip up by the US Ambassador that is still uncorrected?
So much oil! So little cash!
As the Iran sanctions kicked in, everyone and their mother expected oil to go up. But oil, ever the wily one, decided to free fall as sanctions waivers from the US did their job a little bit too well. This has left OPEC and non-OPEC nations scrambling to cut oil production. After a couple of days of tit-for-tat and tense negotiations that sent the price of oil all over the place, a production cut of 1.2 million barrels of oil was agreed by OPEC+. 800,000 of these will be shouldered by OPEC, with Saudi Arabia expected to take the brunt of it. It’s interesting to note that Saudi Arabia asked for Russia to cut 300,000 barrels, with Russia only agreeing to 150,000. Eventually, a compromise of a cut of 230,000 barrels has reportedly been reached. Iran has been granted a waiver from cutting oil production, citing sanctions.
Alot of ink has been spilled about the so-called ’90 day Trade Truce’, but there’s not much we know. China did confirm it will resume US Soybean and LNG imports, and did promise to take down its 40% tarrifs on cars, but details or a timetable on this last point are scarce. So far, it seems the only nation feeling the pain is China, but this is in large part due to internal reforms that Xi is conducting. This week, the Chinese government implemented a series of policies to support employment, including incentives to companies and increasing the availability of loans to small and medium businesses in the private sector.
Qatar’s outta here!
In a sign of further fracturing of the GCC, Qatar has announced its intention to leave OPEC in order to focus on its natural gas production. Functionally, this doesn’t mean much for OPEC, since Qatar amounted for 1.9% of OPEC oil production last quarter. This move however, will probably benefit Qatar by pleasing the US, which has a bitter history with OPEC to say the least. This is an interesting snapshot of Qatar’s ability to resist diplomatic isolation despite Saudi Arabia’s best efforts to do so. Another more interesting snapshot is that the Saudi King has invited the Qatari Emir to the upcoming GCC summit.
The Huawei Saga
This is not a good week for Huawei. On the heels of New Zealand and UK’s BT forbidding Huawei from participating in their 5G network, Japan has announced it’ll be look into implementing similar measures in the coming week. On the bright side, Germany has said it will not bar ‘anyone’ from its 5G network, giving the company a glimmer of hope. However that glimmer was quickly smothered when Huawei’s CFO was arrested for Fraud (related to the Iran sanctions) in Canada. This move will show the US’ partners and enemies that it means business about the Iran sanctions, which Europe is still (unsuccessfully) trying to find a way to avoid. China’s reaction has been muted so far, probably due to the fact that the CFO was arrested without Trump knowing. However, if they’re expecting Trump to be able to release her, they’re in for a rude awakening.
All is not calm in Iran
Loud week for Iran. The President made some bombastic remarks and a bomb went off near India’s important Chabadahar port in Iran. (An attack India promptly condemned.) But it’s important to look under the surface for that country, for all is not what it seems. 18 Iranian lawmakers resigned this week, in protest of the government abandoning plans to restoring water in a province that has been protesting for infrastructure improvements for about a year. Moreover, the government has announced a 20% increase in public sector wages, despite (and probably due to) inflation remaining at sky high levels. To make things worse for Iran, European nations are still throwing the hot potato of who will host the special instrument meant to avoid US sanctions among them. An interesting development, however, is that the EU has now prohibited banks from seizing assets of sanctioned entities, something US sanctions explicitly demand. This’ll place banks in an interesting bind.
- IDF announces tunnel destroying operation on its borders with Lebanon. Expected to last months.- A North Korean soldier has defected to the south.
- Indonesia offers China’s OBOR projects worth up to 60 billion$.- Russia deploys its 4th S-400 in Crimea, now having a unit on each ‘corner’ of the diamond that is Crimea.
- The United States has conducted a FONOP in the Sea of Japan, in response to Russia claims there. This is the first time in decades a FONOP is conducted against Russia. A warship is also expected to enter the Black Sea soon.
- The United States has restored its permanent diplomatic presence in Somalia, another sign pointing to the growing geopolitical importance of the Horn of Africa.
- Fighting has been reported between the jihadist group HTS and the Turkish-backed NLF in Idlib province.
- The German DAX index is down 3.5%, down 20% from the beginning of the year. This is the worst year for the DAX since 2008.
- Centrist Karrenbauer is elected leader of the CDU by a thin margin of 51.7%. They are expected to continue Merkel’s centrist policies, but the thin margin betrays internal divisions in the party.
- The United States has given Russia 60 days to comply with the INF treaty or face withdrawal.
- Australia passes law forcing tech companies to hand over data to the government when required to do so, even if it means building a backdoor.