Global Developments and Analysis: Weekly Monitor, 03 Apil- 09 April, 2023
Prerna Gandhi, Associate Fellow, VIF
Economic
BRICS carries greater economic weight than G7 – study

The BRICS group, comprising the world’s five major developing economies, has overtaken the Group of Seven (G7) by making up a larger share of the global gross domestic product (GDP) based on purchasing power parity, data compiled by Acorn Macro Consulting, a UK-based macroeconomic research firm, shows. According to the findings, the bloc of BRICS countries, Brazil, Russia, India, China and South Africa, contributes 31.5% of the world’s GDP. Meanwhile, the G7, consisting of the US, Canada, France, Germany, Italy, Japan and the UK, and considered the most advanced economic bloc of countries on the planet, add up to 30.7%. The gap between the two groups is expected to continue to grow, analysts say, as China and India are experiencing robust economic growth, and more countries are interested in joining BRICS. Earlier this year, Russian Foreign Minister Sergey Lavrov said that “more than a dozen” nations have expressed an interest in joining BRICS, including Algeria, Argentina, Bahrain, Bangladesh, Indonesia, Iran, Egypt, Mexico, Nigeria, Pakistan, Sudan, Syria, Türkiye, the United Arab Emirates and Venezuela. Meanwhile, Saudi Arabia, Egypt and Bangladesh have acquired equity in the New Development Bank, BRICS’ funding organization. Last year, BRICS countries proposed creating their own currency in order to move away from the US dollar and the euro in mutual transactions. Click here to read...

Risk of hunger, poverty higher due to slow economic growth: IMF

The world economy is expected to grow less than 3 percent this year, down from 3.4 percent last year, increasing the risk of hunger and poverty globally, the head of the International Monetary Fund (IMF) has said. Kristalina Georgieva said on April 06 that growth is expected to remain about 3 percent for the next five years, calling it “our lowest medium-term growth forecast since 1990”, adding that it would be a “severe blow” making it even harder for low-income nations to catch up. “Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis,” she said. Georgieva’s comments came in advance of next week’s meetings of the IMF and its sister lending agency, the World Bank, where policymakers will convene to discuss the global economy’s most pressing issues. The annual gathering will take place as central banks around the world continue to raise interest rates to tame persistent inflation and as a continuing debt crisis in emerging economies pushes debt burdens higher, preventing nations from growing. Low-income countries are expected to suffer a double shock from high borrowing costs and a decline in demand for their exports, which could cause poverty and hunger to increase, Georgieva added. Click here to read...

G7 Plans To Back New Natural Gas Investments

With global energy markets upended, the G7 group of the world’s most industrialized nations is considering endorsing new upstream investment in natural gas despite climate concerns, a draft document seen by Reuters showed on April 06. The energy and climate change ministers of the G7 members—Canada, France, Germany, Italy, Japan, the UK, and the U.S.—are holding a summit in Japan next week, at which they are expected to discuss ways to reduce emissions in the face of more pressing energy security issues. According to the draft document, the ministers will say that new upstream investment in natural gas supply will be needed to address energy security after the Russian invasion of Ukraine. “In this context, in this particular contingency, we recognize the need for necessary upstream investments in LNG (liquefied natural gas) and natural gas in line with our climate objectives and commitments,” reads the draft statement seen by Reuters. The draft is not the final draft of the communique to be adopted and could still change until the summit, which Japan will host on April 15 and 16. Major European economies, including the biggest, Germany, have seen first-hand the need for natural gas supply that’s not coming via pipelines from Russia. Click here to read...

China trade: Beijing targets exporters for help on rocky road to economic recovery

China plans to launch a fresh series of incentives to help exporters’ secure overseas orders and tap growth in developing markets as economic signals point to greater challenges ahead. At a State Council meeting on April 06, Premier Li Qiang said Beijing was working on “a combination of supportive policies” for the sector, warning the economic recovery was at a critical stage and more measures were needed to boost market confidence and “consolidate the growth momentum”. “We must help exporters to secure orders and expand markets with a combination of trade stabilisation policies,” state news agency Xinhua reported, citing the council’s statement from the meeting. “We must try every means to stabilise exports to developed economies, and guide exporters to explore the markets of developing countries and the Association of Southeast Asian Nations.” The report did not say what kind of support would be given but previous meetings of the Ministry of Commerce suggested the help could relate to customs procedures, logistics, funding, and bigger market access via international trade agreements. China, the world’s biggest commodity exporter for more than a decade, reported explosive growth in trade in 2020-2021 as the coronavirus pandemic weighed on the output of other countries. But that growth began to wane from November last year after most countries emerged from the pandemic. Click here to read...

More rich Chinese looking to donate amid Xi Jinping’s ‘common prosperity’ campaign, survey shows

More than 80 per cent of rich Chinese have donated money to various causes and most want to increase philanthropic activity as the government pushes towards “common prosperity” in the years ahead, a recently released survey shows. The survey, which covered 1,100 private banking clients with at least 5 million yuan (US$727,268) of investible assets at China Merchants Bank, provides a glimpse into the attitudes of high-net worth Chinese amid efforts to reduce the country’s wealth gap. A number of ultra-wealthy Chinese tycoons donated tens of billions of dollars following President Xi Jinping’s call for “common prosperity” in 2021, but it has been less clear how the wealthy entrepreneurs on the rung below felt about the campaign. About two thirds of respondents said they would like to increase their donations or keep giving in accordance with their financial situation in the next 10 years, according to the survey, which was conducted in 2021-22 by China Merchants Bank and the China Philanthropy Research Institute (CPRI). However, for the nearly 20 per cent of people who have never made a charitable donation, the main reasons were that they “cannot find a trusted channel” and “do not know about the policy”, said the report published last week. Click here to read...

Why has China launched an anti-corruption probe into its finance industry, and how will it defuse risk?

China’s financial regulators and state-dominated financial industry are facing a new round of party discipline, which will have major implications on the income prospects of state-owned enterprises, the country’s de-risking efforts and funding for businesses. Finance is among China’s most profitable sectors, with the combined profits of China’s six largest state-owned banks rising 6 per cent year on year to 1.36 trillion yuan (US$197.8 billion) in 2022. But the sector’s high exposure to property developers and local financing vehicles show they are prone to big risks, which regulators are keen to get on top of. How different is this disciplinary campaign from previous ones? China’s most recent anti-corruption campaign, which started in 2013, is believed to have been partly about political manoeuvring. The crusade helped President Xi Jinping consolidate his power base, with more than 500 senior officials – vice-minister level and above – investigated and punished. This time around, the Central Commission for Discipline Inspection (CCDI), China’s top anti-corruption agency, is focused on defusing domestic financial risk, dampening external shocks on the country and laying the groundwork for economic recovery and tech innovation. The campaign announced on March 27 is targeting state-owned enterprises, including five financial institutions. It coincides with a shake-up of the financial regulatory regime, including the recent establishment of the Central Finance Commission and the National Financial Regulatory Administration, which have consolidated the party’s control over the financial sector. Click here to read...

China weighs export ban for rare-earth magnet tech

China is considering prohibiting exports of certain rare-earth magnet technology in a move that would counter the U.S.'s advantage in the high-tech arena. Officials are planning amendments to a technology export restriction list, which was last updated in 2020. The revisions would either ban or restrict exports of technology to process and refine rare-earth elements. There are also proposed provisions that would prohibit or limit exports of alloy tech for making high-performance magnets derived from rare earths. In all, there are 43 amendments or additions in the draft list first announced in December by the commerce and technology ministries. Officials have finished taking public comments from experts, and the changes are expected to go into force this year. High performance magnets are used in a wide range of applications, such as motors for electric vehicles. China suspended exports of rare earths to Japan following tensions in 2010 surrounding the Japan-administered Senkaku Islands, which Beijing claims and calls the Diaoyu. Japan specializes in making high-performance magnets from rare earths while the U.S. produces products that use the magnets. That episode led to a heightened sense of alarm in Japan and the U.S. on the economic security front. Washington has since moved to forge a rare-earth supply chain on U.S. soil. China's share of all rare earths produced globally dropped to roughly 70% last year from about 90% a decade earlier, according to the U.S. Geological Survey. Click here to read...

America Is Back in the Factory Business

Production at U.S. factories rose last year, but few things were produced at a more furious pace than factories themselves. Construction spending related to manufacturing reached $108 billion in 2022, Census Bureau data show, the highest annual total on record—more than was spent to build schools, healthcare centers or office buildings. New factories are rising in urban cores and rural fields, desert flats and surf towns. Much of the growth is coming in the high-tech fields of electric-vehicle batteries and semiconductors, national priorities backed by billions of dollars in government incentives. Other companies that once relied exclusively on lower-cost countries to manufacture eyeglasses and bicycles and bodybuilding supplements have found reasons to come home. The pursuit of speed and flexibility prompted sock manufacturer FutureStitch Inc., which has factories in China and Turkey, to open a new one in Oceanside, Calif., last summer—the company’s first in the U.S. Chief Executive Taylor Shupe said retailers don’t want to carry excess inventory in their stores, and the U.S. factory allows the company to quickly replenish stock. He said the company is keeping its overseas factories but is adding a second in the U.S.—and maybe eventually a third—as it develops new products. “There is more and more equity around ‘Made in the USA,’ ” said Mr. Shupe. “To me, this is here to stay.” Click here to read...

Foreign-Subsidy Reporting Rules Could Have a Chilling Effect on EU Investment, Say Industry Groups

Industry groups representing major multinational companies are urging changes to the European Union’s new rules for reporting foreign subsidies, saying they could affect investment in the bloc. Thirteen business associations said in a joint statement published April 04 that they support the EU’s efforts to deal with distortive foreign subsidies. But they said multinational companies may not be able to comply with the rules as they were drafted because of the need for many of them to create “elaborate internal compliance mechanisms” that don’t currently exist. “The uncertainty in the proposed regime risks creating a chilling effect on investment and participation in the European economy,” the industry associations said in the statement. Groups that signed onto the statement include the American Chamber of Commerce to the EU and the Computer & Communications Industry Association, which counts Apple Inc., Meta Platforms Inc. and Amazon.com Inc. among its members. The British Chamber of Commerce for the EU and Belgium and the Japan Business Council in Europe also signed on. The EU’s new foreign-subsidy rules, which are set to take effect later this year, will allow the bloc to prohibit companies from making certain acquisitions or winning large public contracts if they previously received government support that regulators deem to be distortive. The rules mean that many multinational companies will have to track a range of interactions with foreign governments. Click here to read...

Central Banks Double Down On Gold Buying

There’s no sign of a slowdown in central bank gold buying. In February, central bank gold reserves rose by another 52 tons, according to the latest data compiled by the World Gold Council. It was the 11th straight month of central bank net gold purchases. Through the first two months of 2023, net central bank gold purchases came in at 125 tons. This is the strongest start to a year since 2010. China was the biggest buyer in February. The Peoples Bank of China increased gold holdings by a reported 24.9 tons. It was the fourth consecutive month of reported Chinese gold purchases. In that time, China’s official gold reserves have grown by 102 tons. The Chinese central bank accumulated 1,448 tons of gold between 2002 and 2019, and then suddenly went silent until it resumed reporting in November 2022. Many speculate that the Chinese continued to add gold to its holdings off the books during those silent years. There has always been speculation that China holds far more gold than it officially reveals. As Jim Rickards pointed out on Mises Daily back in 2015, many people speculate that China keeps several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE). Last year, there were large unreported increases in central bank gold holdings. Central banks that often fail to report purchases include China and Russia. Click here to read...

Fed fingerprints all over ‘dollar-is-doomed’ talk

As China draws down dollar holdings and the yuan trumps the US greenback in Russia, more and more economists are asking if an inflection point has been reached. Count Nobel laureate Paul Krugman firmly in the “no” camp. “The dollar’s dominance isn’t under threat,” the New York Times columnist argues. Others aren’t so sanguine as Asia’s biggest economy reduced its stockpile of US Treasury securities for a sixth straight month in January, the latest for which there is data on Beijing’s reserve holdings. This week brought news that, in February, the Chinese yuan topped the dollar in trading volume in Russia for the first time. Daily transaction data at the Moscow Exchange suggest volumes rose even more significantly in March. There’s no shortage of theories why. They include President Joe Biden’s White House “weaponizing the US dollar and the global payment system” amid the Russia-Ukraine crisis, as strategist John Mauldin at Millennium Wave Advisors, puts it. That, he notes, “will force non-US investors and nations to diversify their holdings outside of the traditional safe haven of the US.” Others point to the US letting inflation soar to 40-year highs. Political chaos in Washington — from the January 6, 2021 insurrection to today’s debt limit brawl — is doing America’s credit rating no favors. Click here to read...

Pakistan on the brink of economic collapse

Pakistan is on the edge of defaulting on its financial obligations. In 2022, climate change led to severe floods in the country and Russia’s invasion of Ukraine affected food and energy supply chains. Both events exacerbated Pakistan’s economic difficulties. But volatile politics have hamstrung any coherent government response. Pakistan is simultaneously trying to cope with several economic and political crises. Pakistan’s dysfunctional political system and self-serving elites are largely to blame. Ousted former Prime Minister Imran Khan continues to battle the weak and disparate political coalition that replaced him in the courts and on the streets. Pakistan’s Supreme Court is also embroiled in a new controversy surrounding the Election Commission’s postponement of provincial elections in Punjab until October 2023. The removal of Khan by a vote of no confidence in 2022 by Pakistan’s parliament and the subsequent violence and turmoil in the country created a political soap opera. Federal police botched an attempt to arrest Khan from his Lahore home for failing to appear for a hearing before the Election Commission. The Islamabad High Court deflated the tense situation somewhat by delaying the hearing until March 30, 2023. But the drama promises to continue as different cases in different locations will keep Khan on the backfoot. Click here to read...

Albanese's emissions bill seeks to end Australia's 'climate wars'

Climate change has been political kryptonite for Australian leaders over the past decade, contributing to the downfall of multiple prime ministers on both sides of the aisle. But the passage of a new emissions reduction bill may be the beginning of the end of the resource-rich nation's "climate wars." Prime Minister Anthony Albanese's signature climate bill passed parliament on April 07. The legislation will impose carbon emissions limits on 215 of the country's biggest fossil-fuel polluters, requiring them to reduce emissions by 4.9% each year through 2030 or pay to offset them through a carbon credit scheme. The bill will also put a hard cap on industrial pollution to help Australia cut overall carbon emissions by 43% by 2030. The government claims the safeguard mechanism reforms will reduce emissions by 205 million tonnes by 2030 -- equivalent to taking two-thirds of the country's cars off the roads over that same period. Leading Australian climate economist Nicki Hutley praised the new legislation, but said it was not as strong as it could be. "The next step is making sure the government is putting its money in the right places to support that transition," she said. "We need to create new industries that will replace export revenue and jobs, as well as local industry for the domestic economy." Albanese's Labor Party secured the legislative win with the support of the left-wing Greens, who managed to get several concessions, including the hard cap on emissions. Click here to read...

Aging Japan opens Children and Families Agency: 5 things to know

As most Japanese companies and schools kick off a new fiscal year in April, the government has launched a new agency tasked with overseeing policies related to children and reversing the country's declining births. Prime Minister Fumio Kishida spoke at a launch event for the agency in Tokyo on April 03, saying, "I hope that the Children and Families Agency will lead the creation of a society friendly to children and child-rearing." The number of newborns fell 5.1% to below 800,000 last year, accelerating from the 3.4% decline the previous year, according to preliminary data released in February. The population aged 65 or older now accounts for about 29% of the total, one of the highest proportions in the world. From support programs for pregnancy and raising kids to countermeasures against child abuse and poverty, the Children and Families Agency aims to realize what it calls a "children-centered" society. What is the purpose of the agency? The new agency brings together child-related departments that had been spread across multiple ministries. "The Children and Families Agency is the command post for solving various issues that children and youth face and for transforming a society that has been built mainly by adults into a 'children-centered' society," said Masanobu Ogura, who supervises the agency as minister in charge of policies related to children, in a video message released on April 01. Click here to read...

Strategic
Macron trip, hailed as success, still raises questions about EU-China relations

French President Emmanuel Macron has wrapped up his three-day state visit to China, marked by pomp, pageantry and lucrative deals, as both Beijing and Europe try to strike a new balance on how to manage their strained ties amid the Ukraine crisis. Accompanied by European Commission chief Ursula von der Leyen, Macron has sought a non-confrontational approach to “de-risk” Europe’s relations with China, while Beijing has shown enthusiasm towards France’s strategic autonomy in the midst of the deepening US-China feud. The visit has officially been hailed as a diplomatic success, but in the absence of concrete results regarding the Ukraine war and their economic and geopolitical rifts, most observers remain sceptical about the future of Brussels’ engagement with Beijing. Chinese President Xi Jinping rolled out the red carpet for Macron – who last travelled to China in 2019, before the pandemic – giving the French leader extensive face time, including during a rare excursion to the southern city of Guangzhou on April 07. Analysts said Beijing’s special treatment of Macron underlined Xi’s high hopes for him. Macron has sought to position France as a “balancing power” between China and the US and carefully avoided pushing China too hard on Ukraine, Taiwan, or other issues deemed sensitive by Beijing. Click here to read...s

China’s military ‘testing ability to control sea and air around Taiwan’ in multi-day drill after island leader’s US visit

China’s military said on April 08 it is testing the PLA’s capabilities to “seize control of the sea, air and information” with a multi-day exercise around Taiwan days after the island’s president met the US House Speaker. Video and images published by state media showed that the exercise included a long range rocket unit from the Eastern Theatre Command, destroyers, frigates, missile boats, fighter jets, bombers and electronic warfare planes. The troops are conducting patrols “surrounding and approaching” the island to encircle it, according to state broadcaster CCTV. Eastern Theatre Command spokesman Shi Yi said the three-day drill codenamed “Joint Sharp Sword” would continue until April 10. “This is to send a serious warning against Taiwan independence separatist forces and their collusion with foreign forces to stir provocations,” he said. Taiwan’s defence ministry said 71 sorties from People’s Liberation Army warplanes had been detected, 45 of which crossed the median line – an unofficial dividing line in the Taiwan Strait – entering the island’s southwest air defence identification zone. The planes included J-10, J-11 and J-16 fighters; Y-20 transport aircraft; one or more H-6K bombers and KJ-500 early warning and control aircraft. It said a total of nine warships were detected, adding the island’s forces “closely monitored and responded”. Click here to read...

US deploys nuclear-powered missile submarine in Middle East amid Iran tension

The US said it deployed a cruise-missile submarine in the Middle East, boosting its naval fleet in the region amid rising tensions with Iran. The USS Florida – a nuclear-powered vessel capable of carrying as many as 154 Tomahawk land-attack cruise missiles – began transiting the Suez Canal from the Mediterranean Sea on April 07, according to the US Naval Forces Central Command, which is based in Bahrain in the Persian Gulf. The submarine is being deployed in support of the US Fifth Fleet, which is also based in Bahrain, to “ensure regional maritime security and stability”, it said in a statement on April 08. A Bahrain-based spokesperson for the US Navy declined to provide further details on the mission or specify whether the submarine was headed to the Persian Gulf as it would contravene operational security protocols. Last month, the US military carried out airstrikes against Iran-backed groups in Syria. It came after an American contractor was killed in what was said to be an attack by an Iranian-made drone on a US military facility in northeast Syria. Relations have been strained between the two nations after attempts to revive a 2015 nuclear deal between Iran and major world powers stalled, and as Iranian drones are being used by Russia against Ukraine. Click here to read...

Pentagon Investigates More Social-Media Posts Purporting to Include Secret U.S. Documents

The Pentagon is investigating social-media posts that purport to reveal highly classified U.S. government documents on the war in Ukraine and other key international topics, in what could be one of the most dangerous intelligence breaches in decades. Well over 100 images, marked with “Top Secret” and other classifications indicating they represent highly sensitive U.S.-produced intelligence, were posted in the Discord message board of fans of the Minecraft computer game around March 1. While many of them were deleted recently, open-source intelligence researchers have managed to download more than 60 files. The documents, which appear to originate from within the U.S. military and intelligence agencies, include details about the disposition of Ukrainian forces, air defenses and military equipment, classified information about arms and support the U.S. has provided to Kyiv in its fight against Russian invaders, and intelligence on internal matters in a variety of nations, including Israel and South Korea. The Pentagon said April 07 night it is reviewing the matter: “The Department of Defense is actively reviewing the matter, and has made a formal referral to the Department of Justice for investigation,” Pentagon deputy press secretary Sabrina Singh said. “We have been in communication with the Department of Defense related to this matter and have begun an investigation,’’ a Justice Department spokeswoman said in a statement. “We decline further comment.” Click here to read...

Ukraine May Run Out of Air Defenses by May, Leaked Pentagon Documents Warn

Russia could achieve its long-sought goal of air superiority in Ukrainian skies as early as May because Ukraine is running out of antiaircraft missiles, according to purported Pentagon presentations that have leaked on social media. The Pentagon and the Justice Department began an investigation last week into document leaks when some purported U.S. Department of Defense presentations were posted by Russian propagandists on Telegram on April 06. The Wall Street Journal, which viewed these documents and a larger trove that emerged on April 07, hasn’t been able to independently verify their authenticity. Pentagon spokeswoman Sabrina Singh said April 09 that the U.S. continued to assess the validity of the documents “that appear to contain sensitive and highly classified material.” She said the U.S. had discussed the matter with allies over the weekend and was weighing the potential national security impact of the breach. Col. Yuri Ihnat, a spokesman for the Ukrainian Air Force, said that he couldn’t comment on the veracity of the information in the leaked slides as such data is classified in Ukraine. He confirmed, however, that Ukraine’s air defenses face a serious challenge and said that Ukraine urgently needs its Western partners to speed up assistance. “If we lose the battle for the skies, the consequences for Ukraine will be very serious,” he said. Click here to read...

Israel’s Efforts to Expand Arab Relations Slow Over Recent Turmoil

Israeli police raids on Jerusalem’s holiest mosque, army operations against West Bank militants and anti-Palestinian comments by officials have drawn condemnation from Arab leaders—putting a chill on Prime Minister Benjamin Netanyahu’s effort to deepen ties with Middle East neighbors. When Mr. Netanyahu returned to office in December, he said it would be a priority to establish diplomatic relations with Saudi Arabia, after Israel normalized ties in 2020 with the United Arab Emirates and three other Muslim-majority nations in deals known as the Abraham Accords. Earlier this year, Israeli leaders expressed optimism that they could seal a deal with Riyadh within months, with help from the Biden administration, as security concerns over Iran brought Arab countries closer to Israel. Instead, Israeli and Gulf officials said, Saudi interest in openly embracing Israel has cooled as violence between Palestinians and Israelis has intensified and Mr. Netanyahu’s right-wing coalition has pushed to build more Jewish homes on West Bank land that Palestinians have expected to be part of an independent state. “Circumstances have chilled enthusiasm,” an Israeli official said. While quiet cooperation continues between Israel and Saudi Arabia on security, intelligence and business ties, efforts to expand relations with the powerful Gulf kingdom and other Muslim nations have slowed, according to people familiar with the efforts. Click here to read...

Saudi Arabia, Houthis Advance Toward Long-Term Cease-Fire in Yemen

Saudi negotiators met with Iran-backed Houthi rebels in the Yemeni capital of San’a on April 09 to hammer out the final details of a long-term truce that could pave the way toward a lasting peace after eight years of war, officials said. Saudi Arabia and the Houthis have been in direct talks for months, but the prospect of ending Yemen’s seemingly intractable conflict has advanced quickly since last month, when China brokered a detente between Saudi Arabia and Iran. Tehran has backed the Houthis since they took over swaths of Yemen in 2014, and Saudi Arabia led a coalition of Arab nations to dislodge the rebels in a war that created what the United Nations has called the world’s worst humanitarian crisis. In recent days, the Saudis and the Houthis have reached an understanding to extend a cease-fire struck last year until the end of 2023, creating new momentum for a diplomatic end to the conflict. The truce technically expired in October, though there has been little violence since. A Saudi delegation and a group of Omani mediators arrived in San’a, controlled by the Houthis, on April 08 for talks that include both an end to the Saudi-led coalition’s involvement in the conflict and a resolution to the civil war between Yemen’s internal factions, officials said. Click here to read...

Kremlin responds to latest NATO expansion

Russia will respond with appropriate “countermeasures” after Finland officially joined NATO, Kremlin spokesman Dmitry Peskov has said. The Nordic nation became the bloc’s 31st member on April 04, while neighboring Sweden is still in the process of applying for accession. “The expansion of NATO is an encroachment on our security, on the interests of the Russian Federation. That is exactly how we see it,” Peskov said during a call with journalists.“We will apply countermeasures to ensure our security in a tactical and strategic sense,” the spokesman added. He reiterated that Finland’s new status would affect relations between the two neighbors, arguing that the US-led bloc is “unfriendly and, in many ways, hostile to Russia.” Peskov said Moscow would monitor the deployment of NATO forces and installations on Finnish territory, including those along the border it shares with Russia, and would adjust its response to the situation. Helsinki and Stockholm ditched their long-standing tradition of non-alignment shortly after Russia launched its military operation in Ukraine last year. According to the Finnish Foreign Ministry, “the threshold for using military force in the Baltic Sea region will rise” once Finland and Sweden both become NATO members. NATO Secretary General Jens Stoltenberg said on April 03 that Helsinki’s accession would be beneficial for both Finland and the bloc as a whole. Click here to read...

China to launch rival undersea comms network – Reuters

China’s largest telecom firms are working on a massive undersea telecommunications cable network aimed at challenging the US’ dominance in operating global internet infrastructure, four people involved with the project told Reuters on April 06. China Telecom, China Mobile Limited and China Unicom are in the planning stages of what is expected to be a $500-million undersea fiber optic project connecting Asia with the Middle East and Europe, the sources said. The sprawling network, known as EMA (Europe-Middle East-Asia), is reportedly intended to compete with another cable system currently under construction by US firm SubCom LLC called SeaMeWe-6 (Southeast Asia-Middle East-Western Europe-6). Chinese firm HMN Tech (formerly Huawei Marine Networks) was initially selected in 2020 to manufacture the cable for SeaMeWe-6 by a consortium that included the Chinese telecoms now working on EMA. However, a sustained US pressure campaign that included millions of dollars in “training grants” to foreign telecoms in return for switching their votes ultimately pushed the contract to HMN’s US competitor last year, despite significantly higher costs. The three Chinese telecoms have reportedly signed agreements with telecoms in France, Pakistan, Egypt, and Saudi Arabia, with further deals in the works elsewhere in Asia, Africa and the Middle East. The consortium hopes to bring EMA online by the end of 2025, the sources told Reuters. Click here to read...

Foreign ministers of Iran, Saudi Arabia meet in China

The foreign ministers of Iran and Saudi Arabia have met in Beijing in the first formal meeting of the two countries’ top diplomats in seven years. Saudi Arabia’s state-run broadcaster Al Ekhbariya released brief footage of the meeting on Twitter on April 06 showing Prince Faisal bin Farhan and his Iranian counterpart, Hossein Amir-Abdollahian, shaking hands and smiling in front of a traditional Chinese painting as well as the flags of their respective countries. They then headed into a meeting room where they sat down in wide armchairs and chatted. Iran and Saudi Arabia agreed in March to restore ties and reopen diplomatic missions within two months after a years-long rift that raised tensions in the Gulf region and deepened conflicts from Yemen to Syria. The two men discussed steps towards reopening their embassies and consulates, the AFP news agency reported citing Iran’s Islamic Republic News Agency. China helped bring the two sides together and broker the landmark agreement. Riyadh cut formal ties after Iranian protesters attacked Saudi Arabian diplomatic missions in 2016 following Saudi Arabia’s execution of Shia Muslim leader Nimr al-Nimr – one in a series of flashpoints between the two longstanding regional rivals. Click here to read...

Japan to fund defense projects in first departure from aid rules

Japan on April 05 said it plans to offer friendly nations financial assistance to help them bolster their defenses, marking Tokyo’s first unambiguous departure from rules that forbid using international aid for military purposes. Japan’s Overseas Security Assistance (OSA) will be operated separately from the Overseas Development Assistance (ODA) program that for decades has funded roads, dams and other civilian infrastructure projects, Chief Cabinet Secretary Hirokazu Matsuno said at a regular news conference. The aid will not be used to buy lethal weapons that recipient countries could use in conflicts with other nations in accordance with the three principles that govern arms exports, Matsuno added. The decision to expand the scope of international aid to military-related projects follows Japan’s announcement in December of a military buildup that will double defense spending within five years as it looks to counter China’s growing military might in Asia. The first recipients of that security aid will likely be the Philippines, which wants radars to monitor Chinese activity in the contested South China Sea, along with Malaysia, Bangladesh and Fiji, it was reported. Click here to read...

Thousands flee into Thailand after fighting between Myanmar military, rebels

Fierce fighting between the Myanmar military and armed ethnic rebels has forced about 5,000 people to flee across the country’s border into Thailand this week, officials and media said on April 06. The clashes broke out when rebels in the southern Karen state attacked a military border guard outpost, according to reports in Thailand’s Khaosod English newspaper and BBC Burmese. Myanmar’s military government, which overthrew an elected government in a 2021 coup, is grappling with armed insurgencies in large areas of the country and has faced global condemnation for its lethal crackdown on dissent and pro-democracy movements. About 5,000 people, many of them women and children, had crossed into Thailand’s Tak province, and taken refuge in temporary shelters set up by local residents, according to Thai officials and an aid worker. “Many people crossed the border since yesterday and some are still also waiting on the Myanmar side to cross. People don’t have enough drinking water or any toilets for now,” a charity worker, who asked not to be named, told Reuters. Thailand said its air force was monitoring the situation and was “ready to send patrol flights if Thai airspace is violated”. “The Thai-Myanmar border command center in Tak province is working together with relevant agencies to provide safety and give assistance in accordance to humanitarian principles to all those who fled the fighting in Myanmar,” the provincial government said in a statement on April 06. Click here to read...

N. Korea claims another test of underwater nuclear drone

North Korea on April 08 claimed it tested this week a second known type of nuclear-capable underwater attack drone designed to destroy naval vessels and ports, adding to a flurry of weapons demonstrations this year that have heightened tensions with rivals. The report of the four-day test came a day after the nuclear envoys of the United States, South Korea and Japan met in Seoul to discuss the growing North Korean nuclear threat and called for stronger international efforts to crack down on illicit North Korean activities funding its weapons program. The North’s official Korean Central News Agency said the drone, named "Haeil-2" after a Korean word meaning tsunamis or tidal waves, traveled underwater for more than 71 hours before successfully detonating a mock warhead in waters near the eastern port city of Tanchon on April 07. KCNA said the test proved that the weapon could strike targets 1,000 kilometers (621 miles) away with “fatal attack ability.” North Korean state media last month reported two tests of another drone, named “Haeil-1,” and described the weapon as capable of setting off a “radioactive tsunami” to destroy enemy vessels and ports. Analysts, however, are skeptical whether such a device would add a meaningful new threat to North Korea’s growing nuclear arsenal built around missiles and whether it’s reasonable for the North to pursue such capabilities considering its still-limited supplies of nuclear bomb fuel. Click here to read...

G-7, ASEAN justice minister meeting to focus on global rule of law

Justice ministers from the Group of Seven leading industrial nations and the Association of Southeast Asian Nations will hold a joint meeting for the first time in July, with host and G-7 chair Japan aiming to act as intermediary to promote the rule of law in the international order. The ministers will meet in Tokyo on July 7, the day of the main G-7 justice ministers' meeting, with a similar Japan-ASEAN meeting scheduled for the day before. Following Russia's invasion of Ukraine, the world has essentially split into three camps: major democratic countries such as G-7 members; China and Russia, and the Global South, which consists of developing areas including ASEAN, India and Africa. The importance of international law and order, which Russia is seen as violating with its ongoing invasion, is likely a point that G-7 and ASEAN members can agree on. In Southeast Asia, there is concern that the use of force to change the status quo, as Russia exercised in Ukraine, will spread to the Asia-Pacific. Some countries, such as the Philippines, are currently involved in territorial disputes with China over the South China Sea. The G-7 and ASEAN reconfirming the rule of law could serve as a deterrent to China. The countries involved in the July summit are also looking to cooperate in the exchange and training of legal personnel such as judges and bureaucrats. Click here to read...

NATO pledges involvement in Indo-Pacific with eye on China

The North Atlantic Treaty Organization will bolster engagement with the Indo-Pacific region, the alliance's foreign ministers agreed at a meeting here April 05, aiming to put a check on China's push in space and cybersecurity. "We are now stepping up our cooperation with our partners in the Indo-Pacific: Japan, South Korea, New Zealand and Australia," NATO Secretary-General Jens Stoltenberg said at a news conference on April 04. The top diplomats also agreed on continued support for Ukraine. Representatives from those four Indo-Pacific countries, including Japanese Foreign Minister Yoshimasa Hayashi, were invited to the meeting. The alliance's treaty stipulates that members respond collectively to armed attacks in the North Atlantic region. If the forces or facilities of NATO countries like the U.S. or France were attacked in the Indo-Pacific, it would be difficult to invoke the principle of collective defense. Still NATO is seeking engagement with the Indo-Pacific because of concerns over space and cybersecurity. The alliance has debated in recent years whether collective defense can be applied in these areas, where China is rapidly expanding its presence. Cyberattacks during an emergency could damage the operational capabilities of NATO members. How to deal with "hybrid warfare" of conventional and cyberwarfare involving disinformation campaigns has become a major security question. "China is coming closer to us," Stoltenberg said in 2021. NATO positioned Beijing as presenting a "systemic challenge" in its 2022 strategic concept document. Click here to read...

Health
China accuses WHO of politicising search for Covid origins after complaints about lack of transparency

China has accused the World Health Organization of politicising the search for the origins of Covid-19 after it criticised the country over a lack of transparency. The United Nations agency has urged China to give it raw data pointing to a possible origin from wild animals that had been uploaded onto a database but not shared with the WHO and international scientific community. It has also said it believes China has far more information that could shed light on the origins of the disease, which has killed around 7 million people over the past three years. Shen Hongbing, director of the Chinese Centre for Disease Control and Prevention, said on April 08: “We urge relevant persons from the World Health Organization to return to a scientific and impartial stance, and not to actively or be forced to become a tool for individual countries to politicise the origins of Covid-19.” At a press conference at the State Council Information Office, he referred to a preliminary joint investigation between China and the WHO carried out in Wuhan in 2021, saying China had provided “all relevant information about the origins it had at the time, and did not conceal any cases, samples, and test and analysis results”. Click here to read...

Japan vows to fight hay fever crisis

Japanese Prime Minister Fumio Kishida has called for immediate government action to counter a hay fever epidemic, afflicting tens of millions of people nationwide, after the pollen count surged in some areas to the highest levels seen in a decade. “Hay fever is an issue that can be said to be a social problem in our country,” Kishida said this week, as reported by the Japanese daily Mainichi. He added that meetings of relevant ministers will be held “to share information and work on effective countermeasures,” as “we want to achieve results.” The allergy affects around 40% of the Japanese population and has been blamed for a downturn in spending and productivity in the world’s third-largest economy. A 2020 study of Japanese sufferers of the malady suggested that about 80% admitted to a loss of productivity as a result of their symptoms, which include sneezing and congestion. Another study by electronics giant Panasonic estimated that hay fever contributed to a daily economic loss of 221.5 billion yen ($1.68 billion). “Hay fever is said to be a national disease,” said Taro Yamada of the ruling Liberal Democratic Party this week. “If a system that plays the role of a command post is created and countermeasures are taken, it will be a popular policy.” Click here to read...

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