Global Developments and Analysis: Weekly Monitor, 01 August - 07 August 2022

Economic

World re-entering the coal age – IEA

Global coal demand could reach 8 billion tons in 2022, matching a historic high set in 2013, and further growing in 2023, the International Energy Agency (IEA) said in a coal market update report published on Aug 04. “Based on current economic and market trends, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tons, assuming the Chinese economy recovers as expected in the second half of the year... This global total would match the annual record set in 2013, and coal demand is likely to increase further next year to a new all-time high,” the report states. According to the agency, demand is being driven up by rising natural gas prices, forcing many countries to increasingly switch from gas to coal and reopen previously closed coal-fired power plants. The report states that China, which is “responsible for more than half of global coal consumption,” will be the main driver for the growth in demand in the second half of 2022, despite seeing demand drop by 3% in the first half of the year. Demand for coal in India is also expected to rise due to the country’s economic growth and more widespread use of electricity. The EU is also forecast to contribute to demand, as it is increasingly turning to coal in electricity production to replace gas or save it for the winter due to the decline in Russian gas imports.

OPEC+ answers Biden’s diplomacy with tiny oil-output hike

OPEC+ responded to months of diplomatic efforts from US President Joe Biden with one of the smallest oil production increases in its history. The cartel will add only 100,000 barrels a day of oil in September, giving a tight market extra supplies at a much slower pace than in recent months despite pressure from the White House to help cool prices. The 23-nation alliance will divide that amount proportionally between members, and with only the Saudis and the United Arab Emirates able to bolster production, just a fraction of it is likely to be delivered. For July and August, the group had pledged to add more than 600,000 barrels a day to the market. The increase offers little respite for consumers suffering the inflationary squeeze of high oil prices. Brent crude erased earlier losses and was little changed at $100.59 a barrel as of 3:10 p.m. in London. “From a global balance perspective, today’s minuscule quota increase — the smallest since 1986 in absolute terms and smallest ever in percentage terms — is noise,” said Bob McNally, president of Washington-based consultant Rapidan Energy Group and a former White House official. Ministers endorsed the proposal at an online meeting on Aug 03, according to a statement on the OPEC website. Click here to read... [2]

The Global Diesel Crunch Is Going To Get Worse

Despite signs of weakening economic growth globally, regional diesel markets are tight and could tighten even further when winter comes and when Europe bans imports of Russian crude and fuels. Distillate fuel inventories are low in the United States and Europe. Stockpiles in the U.S. haven't increased this summer as usual, and in one month since the end of June, they have seen the biggest drawdown for this time of the year in at least 32 years. The fuel market in Europe is even tighter as industries and utilities look to switch to oil products from natural gas, whose prices are at record highs after Russia slashed deliveries to the EU and showed it could not be considered a reliable energy supplier. Over the next few months, the shortages could become even worse when heating season begins, which will coincide with the planned EU ban on imports of Russian seaborne fuels at the start of 2023. The U.S. exports growing volumes of diesel to Europe, but it is unlikely to ramp up flows much higher because American inventories are also well below seasonal averages while refineries already operate at close to capacity levels. Distillate fuel inventories in the United States fell by 2.4 million barrels in the week to July 29 and are about 25% below the five-year average for this time of year, the latest weekly inventory report by the EIA showed this week. Click here to read... [3]

Mitsui, Mitsubishi slash value of Sakhalin-2 stakes by $1.66bn

Mitsui & Co. and Mitsubishi Corp., stakeholders of Sakhalin Energy Investment Company, on Tuesday slashed the asset value of the project by a combined 217.7 billion yen ($1.66 billion) amid uncertainty over a recent presidential decree. Mitsui reduced the asset value of its stake in the Sakhalin-2 energy project by 136.6 billion yen, while Mitsubishi reduced it’s by 81.1 billion yen. The moves come after both companies slashed the value of their stakes by 44.1 billion yen and around 50 billion yen, respectively, during the fiscal year that ended in March. On June 30, Russian President Vladimir Putin signed a presidential decree to demand Bermuda-based Sakhalin Energy become a Russian company. "We estimated the valuation conservatively as uncertainty grew over the presidential decree even though details of the decree have yet to be seen," Mitsui CFO Tetsuya Shigeta said. The new valuation is based on various scenarios regarding dividends, according to the company. Mitsubishi on Aug 02 told reporters it too had estimated the valuation based on various scenarios. Both companies said the valuation reductions would not impact their profit and loss statements. The remaining investment balance of the Sakhalin-2 project is 90.2 billion yen for Mitsui and 62.3 billion yen for Mitsubishi, according to the companies. Click here to read... [4]

‘The Sacrifice Zone’: Myanmar bears cost of green energy

The birds no longer sing. The fish no longer swim in rivers that have turned a murky brown. The animals do not roam, and the cows are sometimes found dead. The people in this northern Myanmar forest have lost a way of life that goes back generations. But if they complain, they, too, face the threat of death. This forest is the source of several key metallic elements known as rare earths, often called the vitamins of the modern world. And they end up in the supply chains of some of the most prominent companies in the world, including General Motors, Volkswagen, Mercedes, Tesla and Apple. But an AP investigation has found that their universal use hides a dirty open secret in the industry: Their cost is environmental destruction, the theft of land from villagers and the funneling of money to brutal militias, including at least one linked to Myanmar’s secretive military government. And as demand soars for rare earths along with green energy, the abuses are likely to grow. “This rapid push to build out mining capacity is being justified in the name of climate change,” said Julie Michelle Klinger, author of the book “Rare Earths Frontiers,” who is leading a federal project to trace illicit energy minerals. “There’s still this push to find the right place to mine them, which is a place that is out of sight and out of mind.” Click here to read... [5]

World food prices decline amid relief from restarted Ukraine grain exports: FAO

World food prices declined dramatically in July, according to the Rome-based United Nations Food and Agriculture Organization (FAO) on Aug 05. A deal to allow grain shipments from Ukraine and adjustments to the global supply chain helped relieve some price pressure, said the FAO. The monthly index of food commodity prices fell 8.6 percent in July, its largest one-month fall since 2008, according to data released by the FAO. The decline represented the third consecutive month the index fell, though it's the first time in that period the decline was significant. Despite the trend from July, the index is still 5 percent higher than at the start of the year and 13 percent above levels from a year ago. In April, the FAO index reached its highest-ever level due to increases in fuel prices, a slowdown in grain exports from Russia and Ukraine amid those countries' conflict, and other supply chain issues. Every component of the index retreated in July, led by an 11.5-percent fall in prices for grains and cereals -- the largest component in the index. FAO said that development was partially related to a key deal to unblock the main Black Sea ports in Ukraine to allow grain exports from that country, one of the world's top grain producers. But prices for grains and cereals were still nearly 25 percent above their levels from 12 months ago. Click here to read... [6]

US-Russia trade continues to plunge – Census Bureau

Supplies of Russian goods to the US have fallen to their lowest level in 18 years, news outlet RBK reported on Aug 09, citing data from the US Census Bureau. June imports from Russia to the US amounted to $661 million, the lowest since February 2004, when they stood at $653 million. The figure dropped 1.7 times in one month and was nearly five times lower than the monthly average of $2.5 billion in 2021. According to Census data, the sharpest decline was recorded in shipments of nuclear fuel, platinum group metals and fertilizers. US imports of Russian nuclear fuel fell to less than $3 million in June, down from nearly $114 million in May. Imports of Russian platinum group metals, including palladium, fell to $76.3 million compared to $258.5 million in the previous month. Supplies of mineral fertilizers also plunged, despite the fact that Washington removed these from the list of sanctioned goods, falling to $88.8 million against $135.5 million in May. US exports to Russia also dropped to a new record low of $58 million. Overall, mutual trade turnover between the two countries in June was four times less than their average monthly turnover in 2021 (around $3 billion). Click here to read... [7]

Cambodian PM proposes special office to oversee RCEP

Cambodian Prime Minister Samdech Techo Hun Sen on Aug 03 proposed the establishment of a stand-alone secretariat for coordinating implementation of the Regional Comprehensive Economic Partnership (RCEP) free trade agreement, which entered into force in January. Speaking at the opening session of the 55th ASEAN (the Association of Southeast Asian Nations) Foreign Ministers' Meeting, Hun Sen said the initiative is aimed at maximizing the potential of the RCEP. "I believe we do need to have a stand-alone secretariat as soon as possible, to coordinate effective implementation of the RCEP that came into force last January," he said. "Cambodia is ready to host this RCEP secretariat. We have even thought of where in Phnom Penh, the secretariat should be located, while we are working to formulate our detailed proposal." The RCEP comprises 15 Asia-Pacific economies including 10 ASEAN member states and their five trading partners, namely China, Japan, South Korea, Australia and New Zealand. Hun Sen said the RCEP taking effect on January 1, 2022 was a milestone in the trade and investment relations among its members, as the region and the world are struggling to recover from the COVID-19 pandemic. Click here to read... [8]

China trade: July ‘surprise’ as exports beat forecasts, but imports fail to catch up

China’s export growth continued its rising momentum to beat expectations in July, but imports remained weak, sending the total trade surplus to a record high, latest official data showed. Exports grew by 18 per cent last month from a year earlier to US$333 billion, compared to a 17.9 per cent growth in June, according to data released by China Customs on Aug 07. The July figure was above expectations for a rise of 16.2 per cent, according to Wind, a leading provider of financial information services in China. Imports, meanwhile, grew by 2.3 per cent year on year in July to US$231.7 billion, up from 1 per cent growth in June, but well below the expected 4.5 per cent increase. This came as China’s total trade surplus hit an all-time high of US$101.26 billion in July, compared with US$97.94 billion in June. Alicia Garcia Herrero, chief Asia-Pacific economist at French investment bank Natixis, said China “is not comfortable with a trade deficit” in such difficult times. “The more reserves they can accumulate the better, for rainy days. Taiwan’s situation shows that sanctions on [Beijing] could come,” she added. Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, was of the same view. Noting that China’s export growth “surprised again on the upside”, he said “the strong export growth continues to help China’s economy in a difficult year as domestic demand remains sluggish.” Click here to read... [9]

China GDP: 16 provinces insist economic growth goals are still within reach, but wary analysts wonder how

Half of China’s provinces are sticking to their commitments on regional economic growth targets for this year, even as Beijing has softened its tone on achieving the broader national target. Meanwhile, analysts are pointing out how difficult of a challenge this could be for local bureaucrats to achieve. As bolstering economic growth has moved higher on the political agenda in the lead-up to this autumn’s once-a-decade leadership reshuffle, China’s largest economies are doing everything they can to toe the party line. This includes making greater efforts to stabilise inbound foreign investment, trade and private business for the rest of the year while also boosting infrastructure spending. A total of 16 of the nation’s 31 provincial-level jurisdictions, including major municipalities and autonomous regions, have vowed to ensure or strive to achieve their annual socioeconomic development targets that were set earlier this year, according to statements available on their regional websites. Six other provincial regions said they remained mindful of their economic growth targets but did not go as far as outright saying these would be attainable. Boosting regional economies is expected to be a key metric in evaluating the political performances of local officials ahead of the critically important 20th Party Congress. Click here to read... [10]

China cuts tariffs, cosies up to 16 of world’s poorest nations with US, Australia trade ties strained

China will cut tariffs on almost all taxable items imported from 16 of the world’s poorest countries as a gambit to widen overseas economic relations in the face of trade tensions with its major partners, including the United States and Australia. The Customs Tariff Commission of the State Council said last week that it will axe tariffs on 98 per cent of taxable products from “least-developed countries”, including Cambodia, Laos, Djibouti, Rwanda and Togo. The tariff cuts will take effect September 1, covering 8,786 imported items, having first been mentioned in November by President Xi Jinping at the Forum of China-Africa Cooperation. China Daily added that the cuts will gradually expand to all “least-developed countries” that recognise China diplomatically. “China has always wanted to increase its presence in countries near its borders, particularly in the Southeast Asia region,” said Kent Chong, legal partner with professional services firm PwC in Taipei. “That is a competitive or political advantage for them in this region.” Tariff cuts cost China, which has offered exceptions to the world’s poorest countries since 2001, little or nothing and they are easy to implement, analysts said. “They might see it as an easier first step,” said Zennon Kapron, Singapore-based director of financial industry research firm Kapronasia. Click here to read... [11]

Why US efforts to curb inflation won’t lead to another Asian financial crisis

Given the region’s history, one might expect policymakers in the Asean+3 countries – the 10 members of the Association of Southeast Asian Nations, together with China (including Hong Kong), Japan and South Korea – to be particularly anxious about the Fed’s increasing hawkishness. Indeed, recent Fed efforts to curb inflation have prompted fears of a regional financial crisis, similar to the 1997 Asian financial crisis. But the Fed’s actions will not have as much impact on the region as they did in the late 1990s. Today, the Asean+3 economies are stronger and more durable, making a 1997-style meltdown improbable. The 1997 crisis was mainly caused by macroeconomic imbalances and sharp capital flow reversals, triggered by speculative attacks on the Thai baht and other regional currencies. Painful structural reforms since have helped Asean+3 economies rebuild balance sheets, strengthen economic fundamentals and establish robust regulatory frameworks. Policymakers have also assembled a formidable, multilayered US$8.8 trillion financial safety net. In addition to foreign reserves of US$7 trillion, the Asean+3 economies can now rely on multilateral swap arrangements such as the Chiang Mai Initiative Multilateralisation agreement, and the International Monetary Fund. Furthermore, the local-currency bond market in Asean+3 has increased to 123 per cent of gross domestic product this year, compared to 74 per cent of GDP in 2000. With the ability to borrow in local currency, debts are no longer as exposed to currency mismatch. Click here to read... [12]

Record number of foreign workers come to Russia

Over 3.12 million people entered Russia in the second quarter of 2022 to work, TASS reported on Aug 09 citing data from the FinExpertiza audit and consulting network. “In the second quarter of 2022 there were 4.16 million foreigners on migration registration… while 3.12 million people (75%) indicated work as the purpose of arrival. This is a record high quarterly value for the entire period of available statistics since 2017,” the analytics firm said in its report, seen by TASS. The number of arrivals seeking work is a third more than the same time last year, when 2.34 million foreigners came to work in Russia. According to the head of FinExpertiza Elena Trubnikova, the first quarter of the year was marked by an outflow of labor migrants due to the sharp ruble drop amid pressure of Ukraine-related sanctions. However, since the ruble recouped its losses in early April due to changes in Russia’s monetary policy and counter-sanctions, the number of arrivals surged. According to the analyst, while some of the migrants were in Russia before, many new people were registered over the past three months. “This was affected primarily by the unexpectedly strong ruble, as a result of which the Russian labor market has become more attractive to foreigners, because their earnings in foreign currency increased,” she stated. Click here to read... [13]

Apple warns suppliers to follow China rules on 'Taiwan' labeling

Apple has asked suppliers to ensure that shipments from Taiwan to China strictly comply with Chinese customs regulations after a recent visit by senior U.S. lawmaker Nancy Pelosi to Taipei stoked fears of rising trade barriers. Apple told suppliers on Aug 05 that China has started strictly enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as being made either in "Taiwan, China" or "Chinese Taipei," sources familiar with the matter told Nikkei Asia, language that indicates the island is part of China. The U.S. tech titan urged suppliers to treat the matter with urgency to avoid possible disruptions caused by goods and components being held for scrutiny, the people said. The timing is sensitive for Apple, as its suppliers are preparing components that will go into its next iPhones and other new products set to launch this autumn. Using the phrase "Made in Taiwan" on any import declaration forms, documents or cartons could cause shipments to be held and checked by Chinese customs, the sources added. Penalties for violating such a rule is a fine of up to 4,000 yuan ($592) or, in the worst-case scenario, the shipment being rejected, one of the sources said. The democratically governed island also requests that all exports be labeled with product of origin, which means they must carry the words "Taiwan" or "Republic of China," the island's official name. Click here to read... [14]

China wages war on 'corruption' in chip industry after years of fundraising

China is clamping down on the misappropriation of funds inside the national chip industry as its rivalry with the U.S. in semiconductors heats up and an important Communist Party national congress is just a few months away. Authorities have launched a barrage of investigations against semiconductor executives in recent weeks. The white collar busts are happening during the run-up to this fall's twice-a-decade Communist Party congress. The timing suggests that the central leadership is frustrated that China's semiconductor industry is not growing as fast as anticipated. The country's largest state-backed chip fund has become a "hotbed of corruption" according to a report from a Chinese media outlet. The China Integrated Circuit Industry Investment Fund (CICF), which is backed by state-owned banks and other sources, distributes funds to domestic semiconductor companies. The CICF was meant to serve as a launchpad for the central government's industrial development agenda. But in late July, authorities announced they were investigating Ding Wenwu, the CICF's former president. Specifics of the probe have not been disclosed, but it is suspected that Ding funneled cash from the fund toward personal expenses. Ding once worked as the head of the semiconductor policy department within the Ministry of Industry and Information Technology. He was then installed at the CICF, created in 2014. Click here to read... [15]

Taiwan tensions a boon for defense industry but supply clogs loom

Last month, Japan succeeded in obtaining the green light from the U.S. State Department to purchase 150 air-to-air missiles that can be loaded on its F-35 fighters. The principal contractor for the $293 million deal is Raytheon Technologies. The same day, Singapore secured permission to buy laser-guided bombs and various other munitions from the U.S. for $630 million. Four days earlier, Australia won a nod to acquire 80 air-to-surface missiles developed by Lockheed Martin for $235 million. South Korea, meanwhile, will spend $130 million on 31 lightweight torpedoes to use with its MH-60R helicopters for anti-submarine warfare. It has been a busy few months for the Defense Security Cooperation Agency, the Pentagon arm that oversees foreign military sales. In the first seven months of this year, the agency has facilitated 44 such deals, including an $8.4 billion potential sale to Germany of 35 F-35 fighters. The 44 cases are up from 25, 43 and 40 cases in the same period of the previous three years. While negotiations for such sales take months, and the recent flurry may not be a direct consequence of the Ukraine war or tensions over Taiwan, top U.S. defense contractors are united in saying that they see an international bonanza ahead. But this golden period comes with a caveat: supply chain constraints. Leaders at Lockheed, Raytheon, Boeing, Northrop Grumman and General Dynamics all spoke of the difficulty of securing parts and labor during recent earnings calls. Click here to read... [16]

Strategic

Biden authorizes largest weapons assistance to Ukraine

The administration of U.S. President Joe Biden announced that the United States will provide Ukraine with 1 billion U.S. dollars’ worth of additional security assistance, the largest one-time weapons package since the beginning of the Russia-Ukraine conflict. According to a statement by the Department of Defense, the package - the 18th tranche of presidential drawdown since August 2021 - included additional munitions for High Mobility Artillery Rocket System (HIMARS), 75,000 rounds of 155 mm artillery ammunition, 20 120 mm mortar systems and 20,000 rounds of 120 mm mortar ammunition, as well as munitions for National Advanced Surface-to-Air Missile System (NASAMS). Washington will also deliver to Kiev 1,000 Javelins, hundreds of AT4 anti-armor systems, 50 armored medical treatment vehicles, anti-personnel munitions, explosives, demolition munitions and demolition equipment, the statement said. The just-announced aid brings total U.S. commitment of security assistance to Ukraine to approximately 9.8 billion dollars since Biden took office, according to the Pentagon. Click here to read... [17]

Pelosi Trip Bolsters Taiwan While Creating New Security Risks, Strains With China

U.S. House Speaker Nancy Pelosi’s visit to Taiwan drew praise for bolstering an American partner struggling to fend off China, but also set off a response from Beijing that is creating new risks to regional security and is further straining relations between the two powers. In response to Mrs. Pelosi’s Taiwan stop, China pressed ahead Aug 05 with a second day of large-scale military exercises, suspended climate-change talks and some military contacts with the U.S. and placed unspecified sanctions on Mrs. Pelosi and her family. U.S. Secretary of State Antony Blinken said Beijing was overreacting, and Mrs. Pelosi sounded defiant. “We will not allow them to isolate Taiwan,” Mrs. Pelosi said in Tokyo, the last stop in her visit this week to some of the U.S.’s closest partners in the region. Mrs. Pelosi has said her trip was meant to strengthen mutual security, economic partnership and democratic governance. Particularly important, she said, was to show solidarity with Taiwan’s democracy and declare the U.S.’s commitment to defending it. For Beijing, Mrs. Pelosi’s visit confirms a deepening suspicion that the U.S. is backtracking on previous commitments to limit ties with Taiwan and that its political and military support strengthens Taipei’s resistance to China’s goal of a political union with the island—an objective Beijing has vowed to achieve by force if necessary. Click here to read... [18]

PLA’s Taiwan live-fire drills ‘highlight military’s joint warfare advances’

The PLA Eastern Theatre Command deployed multirole fighters to simulate attacks on Taiwan on Aug 07, the final day of live-fire drills encircling the island. With the support of early-warning and jamming aircraft, fighter planes, and warships, the air force conducted joint precision strike exercises and crossed the Taiwan Strait from the north and south, the command said. Although there was no official announcement that the drills had ended, mainland military analysts declared the exercises a success, particularly in joint operations. “These are the first joint naval and air exercises surrounding the entire island of Taiwan in a very strong real-world context,” state news agency Xinhua quoted Meng Xiangqing from the PLA’s National Defence University as saying. “It fully reflects the great improvements in joint warfare capabilities.” Meng said there were also advances in the military’s long-range denial ability, with targets set on the eastern side of the island for the first time. The commentary said it was also the first time a live-fire exercise had been directed in an area covered by Taiwan’s Patriot missile system. It warned that Beijing would react with “stronger” countermeasures if provocation intensified, but the principle of “peaceful reunification and ‘one country, two systems’” remains unchanged. Click here to read... [19]

Explainer | What defence dialogues did Beijing cancel after Pelosi’s Taiwan trip and how does this affect ties with US?

China announced eight measures on Aug 05 in retaliation for United States House Speaker Nancy Pelosi’s visit to Taiwan, with the top three involving the cancellation of important dialogues between the People’s Liberation Army and the US military. The next day, it was reported that several calls from the Pentagon to Chinese counterparts were ignored, a development criticised by US officials as “shortsighted and reckless” and leading to concerns it may cause dangerous misjudgment or conflict between the two superpowers. The three dialogues Beijing called off are China-US theatre commanders’ talks, defence policy coordination talks (DPCT) and military maritime consultative agreement (MMCA) meetings. They represent different levels of contact between the PLA and the US military and serve as stabilisers for not just the inter-military relationship but, sometimes, also in the overall bilateral ties between the countries. The MMCA meeting is the result of an agreement signed in January 1998 following the de-escalation of the 1996 Taiwan Strait crisis, in which the US Navy sent its aircraft carrier strike groups to confront the PLA over missile test firings at the peak of tension. The China-US theatre commanders’ talks is a new mechanism. The PLA in its 2015 restructuring set up five theatre commands and granted them certain powers for operational command and decision making on frontline issues. Click here to read... [20]

US makes call on nuclear missile test

US defense officials have cancelled a planned test of an intercontinental ballistic missile to reduce the risk of catastrophic “misinterpretation or miscommunication” at a time when Russian nuclear forces are on high alert amid Moscow’s military offensive in Ukraine. The decision against testing the LGM-30G Minuteman III missile was first reported on Aug 05 by Reuters, which cited comments from a US Air Force spokeswoman. It comes a month after the same test was delayed because Russian President Vladimir Putin had ordered his country’s nuclear deterrent forces to be in a higher state of readiness, or “special regime of combat duty.” The ICBM test has now been called off altogether for the same reasons, Air Force spokeswoman Ann Stefanek said. “The Air Force is confident in the readiness of the strategic forces of the United States,” Stefanek added, noting that the next such test is scheduled for later this year. Pentagon spokesman Todd Breasseale also confirmed that the test was called off on concern that Moscow would view it as escalatory. He told NBC News that the launch had been delayed “due to an overabundance of caution to avoid misrepresentation or miscommunication during the ongoing Russian invasion of Ukraine.” Click here to read... [21]

China upgrades nuke test site with an eye on Taiwan

Satellite photos obtained by Nikkei last week show that China is rapidly expanding its nuclear test facilities in western Xinjiang, sparking fears of a renewed nuclear arms race with the US as tensions boil over Taiwan. The Nikkei report states that a satellite hovering at 450 kilometers detected extensive construction at the Lop Nur test site, a dried salt lakebed in the arid and restive Xinjiang region that borders Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, and Pakistan. The report said that China may be building a sixth tunnel for underground testing, evidenced by broken rocks piled nearby and extensive coverings erected on a nearby mountainside. The satellite photos also show power cables, possible storage facilities for high explosives and unpaved roads from command centers. An unnamed expert from US private geospatial analysis company AllSource Analysis told Nikkei that these developments enable China to conduct nuclear-related tests anytime. The power lines and road system now connect Lop Nur’s western military nuclear test facilities to new possible test areas in the east. Nikkei suggested that evidence of a sixth test tunnel points to China’s planned resumption of nuclear tests, the last of which was conducted in 1996. Click here to read... [22]

North Korea tests explosive devices at nuclear site: U.N. report

North Korea has tested explosive devices and begun digging new underground tunnels at its Punggye-ri nuclear test site, which "paves the way for additional nuclear tests for the development of nuclear weapons," according to a draft U.N. report obtained by Nikkei. The report, which covers the first seven months of this year, details tactics used by Pyongyang to dodge sanctions. It was submitted Aug 03 to the Security Council's North Korea sanctions committee, and will be released after discussion among the council's permanent members. North Korea has expanded its capacity to produce fissile materials -- a key component of nuclear weapons or other nuclear explosive devices -- at its Yongbyon nuclear facility, and is excavating tunnels at Punggye-ri that were destroyed amid denuclearization talks with the U.S. in 2018, according to the report. Detonators that can be used in nuclear tests were being tested at Punggye-ri, according to a Security Council member. Preparations for a nuclear test had entered into their final stages as of early June, according to an analysis by two Security Council members. Cybercrime group Lazarus Group and others continue to engage in cyberattacks, stealing hundreds of millions of U.S. dollars in cryptocurrencies, including ethereum and USD coin, according to the report. Forty-seven companies and institutions, including defense contractors, became infected with new malware distributed by Lazarus Group in the first quarter of 2022. Click here to read... [23]

Kishida urges more global transparency on nuclear weapons

Kishida is the first Japanese leader to attend a review conference. "I call on all nuclear weapon states to engage in a responsible manner," he said in a speech. Kishida aims for a world without nuclear weapons. But in light of the "harsh security environment" in the world today, he announced his new "Hiroshima Action Plan" -- an initiative focused on continuing the nonuse of nuclear weapons, enhancing transparency on nuclear forces, decreasing the global nuclear stockpile, promoting peaceful uses of nuclear energy, and encouraging visits to Hiroshima and Nagasaki. Though the global stockpile "has significantly decreased since the peak of the Cold War, there are still more than 10,000 nuclear weapons in the world," Kishida said. "Maintaining this decreasing trend is extremely important in getting closer to a world without nuclear weapons." In transparency, Kishida wants countries like China to disclose information on their production of plutonium and other fissile materials. Japan "encourages the U.S. and China to engage in a bilateral dialogue on nuclear arms control and disarmament," he said. Kishida announced that Japan will contribute $10 million to the U.N. for a new fund that brings youth from around the world to Hiroshima, "inviting future leaders to Japan and providing them with opportunities to learn firsthand the realities of nuclear weapon use." Click here to read... [24]

EU submits a ‘final text’ at Iran nuclear talks

The European Union submitted a “final text” at talks to salvage a 2015 deal aimed at reining in Iran’s nuclear ambitions, and Tehran said on Monday it was reviewing the proposals. Britain, China, France, Germany, Iran and Russia, as well as the United States indirectly, resumed talks on Thursday in Vienna, months after they had stalled. The European Union has submitted a “final text”, a European official said on Aug 09. “We worked for four days and today the text is on the table,” the official told reporters on condition of anonymity. “The negotiation is finished, it’s the final text … and it will not be renegotiated.” “Now the ball is in the court of the capitals and we will see what happens,” the European official added. “No one is staying in Vienna.” The official said he hoped to see the “quality” text accepted “within weeks”. Iran said it was examining the 25-page document. Iranian sources have suggested a key sticking point has been a probe by the International Atomic Energy Agency (IAEA) on traces of nuclear material found at undeclared Iranian sites. “That has nothing to do with” the Joint Comprehensive Plan of Action (JCPOA) agreement of 2015, the European official said. “I hope Iran and the IAEA will reach an agreement because that will facilitate a lot of things.” Click here to read... [25]

North Korea offers Russia ‘100,000 volunteers’ to fight Ukraine: state media

North Korea has offered 100,000 “volunteer” troops to the Kremlin to help Russia win the war against Ukraine, according to Russian state media. “There are reports that 100,000 North Korean volunteers are prepared to come and take part in the conflict,” said Russian military pundit Igor Korotchenko on Channel One Russia, according to the New York Post. Korotchenko praised the North Korean military’s “wealth of experience with counter-battery warfare”, the newspaper reported. Effective counter-battery warfare is of increased importance to the Russian military following the US decision to donate a dozen HIMARS (High Mobility Artillery Rocket Systems) to Ukraine. The long-range, high-precision rockets have made “a massive difference” to Ukraine’s war efforts, a military expert told Insider’s Sinéad Baker last month. Korotchenko went on to argue that Russia should welcome the North Korean troops and their counter-battery expertise. “If North Korea expresses a desire to meet its international duty to fight against Ukrainian fascism, we should let them,” he said, according to the New York Post. North Korea’s military is the world’s fourth largest, with nearly 1.3 million active personnel, according to the New York-based Council for Foreign Relations. A further 600,000 serve as reserve soldiers. Click here to read... [26]

Erdogan’s diplomacy with Russia alarms West – FT

Western officials are “increasingly alarmed” that Turkey, a NATO ally and prospective EU member, is deepening its cooperation with Russia, the Financial Times has reported. Turkish President Recep Tayyip Erdogan recently returned from Sochi vowing to boost trade after talks with Russian President Vladimir Putin. Six unnamed Western officials told the newspaper that they were “concerned” about the plans of Russia and Turkey to cooperate on trade and energy. One EU official said that Brussels was monitoring relations between Ankara and Moscow “more and more closely,” given how Turkey seems to be “increasingly” becoming a platform for trade with Russia. Following a four-hour meeting with Putin on Aug 05, Erdogan welcomed Russia’s role in building a nuclear power plant in Turkey. The two nations aim for bilateral trade turnover of $100 billion, and are cooperating against terrorism and toward peace in Libya and Syria. Putin pledged that Russia would supply Turkey with oil, gas and coal “without any interruptions,” after the two leaders agreed that Ankara would pay for some of this gas in rubles. Another official told the newspaper that Erdogan’s behavior is “very opportunistic,” adding that “we are trying to make the Turks pay attention to our concerns.” Although a NATO member since 1952 and an EU applicant since 1987, Turkey has broken with both blocs on several occasions, most recently over the conflict in Ukraine. Click here to read... [27]

One year after Afghanistan, spy agencies pivot toward China

In a recent closed-door meeting with leaders of the agency’s counterterrorism center, the CIA’s No. 2 official made clear that fighting al-Qaida and other extremist groups would remain a priority--but that the agency’s money and resources would be increasingly shifted to focusing on China. One year after ending the war in Afghanistan, President Joe Biden and top national security officials speak less about counterterrorism and more about the political, economic and military threats posed by China as well as Russia. There’s been a quiet pivot within intelligence agencies, which are moving hundreds of officers to China-focused positions, including some who were previously working on terrorism. Intelligence officials stress that the counterterrorism fight is hardly being ignored. Just a week ago, it was revealed that a CIA drone attack killed al-Qaida leader Ayman al-Zawahri in Kabul. But days later, China staged large-scale military exercises and threatened to cut off contacts with the U.S. over House Speaker Nancy Pelosi’s visit to Taiwan. It underscored the message CIA deputy director David Cohen had delivered at that meeting weeks ago: The agency’s top priority is trying to understand and counter Beijing. Intelligence officials have said they need more insights on China, including after being unable to definitively pinpoint the cause of the COVID-19 pandemic. Beijing has been accused of withholding information about the origins of the virus. Click here to read... [28]

Zawahri strike puts Taliban in tight spot between U.S., jihadis

The killing of al-Qaida leader Ayman al-Zawahri in a U.S. drone strike in Kabul has put the Taliban in an awkward position between Washington and groups claiming the mantle of jihad in the region, analysts say, adding another element of uncertainty to Afghanistan's volatile mix. The 71-year-old native of Egypt was one of the world's most-wanted terrorists for his alleged role in helping Osama Bin Laden plot the 9/11 attacks, though the U.S. has been hunting him since the 1990s. "Now justice has been delivered and this terrorist leader is no more," President Joe Biden said in a televised address from the White House on 01 Aug, saying he had given final approval for the "precision strike" after months of planning. Security experts consider Zawahri's demise a severe blow to al-Qaida, as he had helped the group survive and spread in the years after Bin Laden's killing by U.S. forces in a raid in Pakistan in 2011. Zawahri, whose name is sometimes spelled Zawahiri, had a $25 million price on his head. The killing on Saturday came two weeks after a United Nations Security Council report confirmed that Zawahri was alive and "communicating freely," following the Taliban's takeover of Afghanistan last year as U.S. troops withdrew. Click here to read... [29]

Russia launches Iranian satellite into space from Kazakhstan base

A high-resolution Iranian-owned satellite has been launched into space from a base in Kazakhstan on board a Russian rocket, amid speculation about its uses. The remote-sensing Khayyam satellite, which Iran has said it wants to use for non-military purposes, was successfully launched on Aug 10, according to footage aired live by Iranian state television. Earlier this month, The Washington Post quoted anonymous Western intelligence officials as claiming that Russia plans to use the satellite “for months or longer” to assist its war efforts in Ukraine. The claim has been rejected by the Iranian Space Agency (ISA), which said last week it will have exclusive control over the satellite “from day one”, and Russia’s Roscosmos. ISA said orders transmitted to the satellite and data received from it will be encrypted and controlled by a team of Iranian engineers and scientists in Iran, and “no other country has access to the information throughout this process”. The agency also emphasised that images from Khayyam, which are expected to come with a resolution of one metre, will be used to bolster “management and planning capacities” in a variety of industries such as agriculture, natural resources, environment, water resources, mining, disaster management, in addition to border monitoring. Click here to read... [30]

Israel, Palestinian Islamic Jihad declare truce in Gaza

Israel and the Palestinian armed group Islamic Jihad have declared a truce, raising hopes of an end to three days of Israeli bombardment in Gaza that has killed at least 44 Palestinians, including 15 children. The truce began at 11:30pm local time on Aug 07 (20:30 GMT) despite a flurry of Israeli air raids and Palestinian rocket attacks up until the last minute. While both sides had agreed to halt the fighting, each has warned the other that it would respond with force to any violence. “This ceasefire is holding,” said Al Jazeera’s Safwat al-Kahlout, reporting from Gaza City. “Local government offices have announced they will reopen their doors for the public, while universities have also announced they will reopen for students. The municipality of Gaza and other municipalities have also announced they will send their equipment to remove the rubble and try to do an initial assessment of the destruction.” Later on Aug 08, Gaza’s sole power plant restarted after fuel trucks passed from Israel into the Palestinian enclave. The facility had shut down on Aug 06, days after Israel’s closure of the goods crossing. Sunday’s truce was mediated by Egypt, with help from the United Nations and Qatar. The secretary general of Islamic Jihad, Ziad al-Nakhala, said one of the key agreements was an Egyptian guarantee that it would work towards the release of two of the group’s leaders who are being held by Israel. Click here to read... [31]

Health

China races to contain COVID-19 outbreaks in tourism hubs Tibet, Hainan

China raced on Aug 9 to stamp out COVID-19 outbreaks in the tourist hubs of Tibet and Hainan, with the authorities launching more rounds of mass testing and closing venues to contain the highly transmissible Omicron variant. Mainland China reported 828 new domestically transmitted cases across more than a dozen provinces and regions for Aug 8, with more than half of them in Hainan, a highly popular tourist destination, official data showed on Tuesday. Tibet, which until now had reported only one symptomatic case since the pandemic started more than two years ago, has also reported cases. Parts of Tibet were running mass COVID-19 testing on Aug 10, including its two largest cities Lhasa and Shigatse, where local authorities suspended large events, closed entertainment and religious venues, and shut some tourist sites including the Potala Palace. Tibetan authorities reported one local patient with confirmed symptoms and 21 local asymptomatic infections on Aug 8. While the caseload was very small compared with elsewhere in China and globally, the rare infections struck a nerve among some residents. Shigatse, a gateway city to the Everest region in Tibet, has scheduled a "silent period" lasting three days during which people are banned from entering or leaving, and many businesses suspended. Click here to read... [32]