Global Developments and Analysis: Weekly Monitor, 13 March - 19 March, 2023

Economic

China's debt issues loom as Beijing revamps financial regulation

The centralization of Chinese financial regulation unveiled at this year's National People's Congress strikes many investors as sign of Beijing's concern about the big debts piled up by local governments and their off-budget funding vehicles. Under the changes made at its annual parliamentary session, China's existing banking and insurance regulator will be replaced by a new agency called the National Financial Regulatory Administration. The People's Bank of China will focus more on macro-economic issues and less on financial regulation. As a policy matter, the changes reflect a desire to shift "towards financial stability and de-risking the financial exposure of local governments and financial institutions," Australian-based ANZ bank said in a note last week. The finances of local governments are a complicated subject in China because so much of their debt comes in the form of non-budgetary items such as borrowings by local government funding vehicles, or LGFVs. As a result, discussion of public finances in China often focuses on official borrowings as well as the other kinds, which the International Monetary Fund terms as "augmented debt". The financial revamp is a signal of a more "centralized approach" by Beijing in dealing with public debt issues, said Gary Ng, a senior economist at Natixis, adding that foreign investors will be looking to see whether regulators will continue to allow the LGFVs to raise funds. Click here to read... [2]

Manufacturers Move Back to China as Renewal of U.S. Trade Deal Is Delayed

The expiration of the Generalized System of Preferences, or GSP, in December 2020 meant more than 100 countries lost tariff-free access to the U.S. market for thousands of goods, from travel bags and jewellery to car parts and lamps. The program has expired more than a dozen times since it came into force in 1975, but has usually been swiftly renewed. This time, renewal has been complicated by political wrangling over how to decide which countries should be eligible for GSP benefits, as well as procedural hurdles linked to broader disagreements in Congress over trade and China. For the U.S. economy as a whole, the lapse isn’t significant, accounting for a tiny percentage (a bit under 1%) of U.S. imports, which overall notched almost $4 trillion in 2022. But for some businesses, it has meant surging costs and hard choices about where to manufacture. More broadly, executives and trade experts say, the failure to renew the GSP is an avoidable flaw in U.S. trade policy toward China that risks denting investment in countries that show promise as alternatives for manufacturing outside China’s vast factory floor. The GSP is one of the U.S.’s oldest and largest trade agreements, developed in the 1970s with the goal of boosting trade and economic development by eliminating tariffs on goods manufactured in developing countries. Click here to read... [3]

US-China trade ‘becoming less directly interdependent’ amid decoupling despite ‘misleading’ data

China is turning away from US imports, exacerbated by Washington’s effort to impose controls on the sales of semiconductor manufacturing equipment, as part of a bilateral decoupling, according to a new report, contrary to suggestions of record trade last year. In 2022, US exports to China increased by US$2.4 billion compared to a year earlier to US$153.8 billion, while American imports from China increased by US$31.8 billion to US$536.8 billion, according to the US Bureau of Economic Analysis. But despite overall trade showing signs of resilience, the US-based Peterson Institute of International Economics (PIIE) said that the “widely reported data point was misleading” after it was suggested the supposed economic decoupling had not yet arrived after trade hit record levels in 2022. “Through trade, the two economies are becoming less directly interdependent,” the Washington-based think tank said in a report released on March 16. “China is now shifting some purchases of foreign goods away from the United States. Before the trade war, manufacturing goods represented 44 per cent of the total amount of US goods and services exports to China – the largest component of pre-trade war commerce, PIIE said. However, by 2022, that proportion had fallen to 41 per cent, although China’s total imports of manufactured goods also fell by 8 per cent last year, PIIE said. Click here to read... [4]

French Protests, Turning Violent, Aim to Override Macron’s Pension Overhaul

President Emmanuel Macron of France might have circumvented Parliament in passing his contentious pension overhaul, but there remains a large constituency—millions of street protesters—who contend they have final say in the matter. Protest movements have long been the final arbiter, albeit an unofficial one, of France’s political system, bringing successive governments to their knees and forcing previous presidents to abandon or even rescind legislation protesters oppose. That is why thousands of protesters have streamed into public squares across France since Mr. Macron exercised Article 49 of the constitution to raise France’s retirement age to 64 from 62 by 2030 without the consent of Parliament. Over the weekend, protesters set fire to piles of garbage in Paris that had accumulated from a two-week trash-collectors strike, leading police to use tear gas and water cannons to disperse those who had gathered on March 18 evening. Protesters also gathered and clashed with police in cities including Bordeaux, Nantes and Brest in what has become a nightly ritual since Mr. Macron imposed his overhaul.Behind the scenes of violence lies a strategy: Turn up the protests and turn the screws on lawmakers and other officials until they force Mr. Macron to reverse course. Click here to read... [5]

G-7 Opposes Lowering Russian Crude Price Cap From $60 a Barrel

The Group of Seven advanced democracies want to keep the price cap on Russian crude at $60 a barrel, according to people familiar with the matter, thwarting hopes in some European capitals of tightening the Western sanctions this month. European Commission officials warned the bloc’s member states about the G-7 position, saying that President Biden had told European Commission President Ursula von der Leyen in the Oval Office of the White House last week there was no appetite in Washington for adjusting the oil sanctions, according to the people familiar with the matter. A spokeswoman for the U.S. National Security Council declined to comment. The G-7 position could spark fresh tensions within the EU over the price-cap scheme. Western officials had agreed to review the $60 a barrel level for the price cap in March, and Poland and the Baltic states have repeatedly pressed for a cap below $60 a barrel. Ukrainian officials have supported lowering the cap, hoping to further reduce Russia’s oil revenues. Officials at the U.S Treasury, which designed the price-cap plan, have said that the current price-cap system is largely working as intended. They have argued that the plan is already achieving its two goals: keeping Russian oil available on global markets, while still reducing the Kremlin’s revenue from the sales. Click here to read... [6]

The World Bank May Return To Financing Natural Gas Projects

The World Bank could be open to funding gas projects in Mozambique to ensure greater energy access if the costs are the cheapest among energy sources, Victoria Kwakwa, World Bank Vice President for Eastern and Southern Africa, told Bloomberg in an interview published on March 13. Back in 2017, the World Bank Group said it would no longer finance upstream oil and gas after 2019. But the group noted that “In exceptional circumstances, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments.” In low-income Mozambique, one of the poorest countries globally, 30.6% of the population of around 32 million people had access to electricity in 2020, per World Bank data. Kwakwa told Bloomberg that the World Bank could support Mozambique’s upstream gas development if that is the lowest-cost resource to have more people gain access to electricity and help other countries, via exports, to cut back on more polluting energy sources such as coal. “My sense of Mozambique’s natural gas assets is that it can play an important role for the global transition,” Kwakwa told Bloomberg while on a visit to Mozambique. Click here to read... [7]

New Global Crude Flows Make UAE A More Powerful Oil Trading Hub

In 2021, India's refining giant Reliance Industries announced plans to move most of its oil-trading staff from Mumbai to Dubai. In 2022, Swiss-based Litasco, the trading arm of Russian Lukoil, moved part of its operations to Dubai, too. Rosneft and Gazprom Neft are also considering setting up a presence in Dubai. It's not just traders, either. Reuters recently reported that Indian refiners had begun paying for their Russian oil cargoes in Emirati dirhams. And these dirhams are being paid on deals closed with traders based in Dubai. The unprecedented wave of sanctions that the West unleashed on Russia has now prompted a redesign of the international oil market. And it will likely be permanent. Earlier this week, Reuters' Alex Lawler detailed the shift in oil flows after U.S. sanctions on Iran and EU and G7 sanctions on Russia redirected Iranian and Russian crude to Asia and away from Europe and the United States. In doing this, the sanction push led to lower oil prices for Asian buyers after decades of what analysts had called "the Asian premium". "It's safe to say that some major consumers in Asia, most notably India and China, are the major winners of the sanctions," Ole Hansen, the commodities head of Danish Saxo Bank, told Reuters. Click here to read... [8]

Europe’s Drought Deepens, Threatening Agriculture and Industries

A rainy, cool climate has sustained fisheries in this region north of Lyon for eight centuries, filling up hundreds of man-made ponds that are France’s main source of freshwater fish. This year, however, many of the ponds are nearly empty after an exceptionally dry and warm stretch of weather that has lingered across much of Europe since last summer. The farmers expect to raise half as much fish as they did last season and lay off workers who usually help with the catch. “It’s really a catastrophic situation for us,” said Michel Grange, director of a cooperative of fish farmers in the Dombes region. “Only 50% of the ponds can now be filled with fish. The rest aren’t worth it because they’ll be dry all summer.” Europe is in the midst of a drought that is hitting the continent’s economy, from agriculture and power generation to shipping. It began last summer with hot weather and a lack of rain, and then continued this winter with long dry spells in Western Europe. Barely a drop of rain fell in France from mid-January until the end of February, the longest dry spell since records began in 1959. Dry conditions have been fueling wildfires in the Irish countryside. In Italy, parts of the Po river have been reduced to large puddles, one reason why the canals of Venice, which are fed by the Po, have run nearly dry. Click here to read... [9]

UBS to take over Credit Suisse in historic $3.2 bn rescue deal

UBS will take over Credit Suisse in a historic deal, leading to a consolidation of longtime rivals in Switzerland. The deal was announced March 19 by both banks as well as Swiss National Bank -- the central bank -- and Switzerland's financial authority. "UBS today announced the takeover of Credit Suisse. This takeover was made possible with the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank," the central bank said in a statement. "Both banks have unrestricted access to the SNB's existing facilities, through which they can obtain liquidity from the SNB in accordance with the 'Guidelines on monetary policy instruments,'" the statement said. To support the deal, the Swiss government will provide a loss guarantee of up to 9 billion Swiss francs ($9.72 billion). Swiss National Bank has agreed to offer 100 billion Swiss francs of liquidity backed by a federal default guarantee. According to Credit Suisse's press release, all shareholders of the struggling bank will receive 1 share in domestic peer UBS for 22.48 shares in Credit Suisse as merger consideration. "This exchange ratio reflects a merger consideration of [3 billion Swiss francs, or $3.24 billion] for all shares in Credit Suisse," the bank said. UBS will be the surviving entity upon closing of the merger transaction, the bank announcement said. Click here to read... [10]

Third US crypto bank collapses

New York-based Signature Bank was shut down by US regulators on March 12, becoming the third failure in the country’s banking industry in less than a week. According to a joint statement from the Federal Reserve, US Treasury and the Federal Deposit Insurance Corporation (FDIC), the lender “was closed by its state chartering authority.” The statement from the regulators was issued to announce a new emergency program to protect depositors of failing banks. They explained that they would make a “systemic risk exception” for both Signature and Silicon Valley Bank (SVB), a tech and start-up focused lender that was shut down following a bank run last week, allowing the clients of both banks to have full access to their deposits.“[SVB] depositors will have access to all of their money starting Monday, March 13… We are announcing a similar systemic risk exception for Signature Bank… all depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” the regulators said, adding that they would use the FDIC’s deposit insurance fund to fully protect all depositors, both insured and uninsured. Signature was a big lender to the crypto industry. As of December 31, it had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing. Click here to read... [11]

Samsung plans world’s largest high-tech chip cluster

Samsung Electronics has announced plans to build five new semiconductor factories south of Seoul over the next 20 years in a bid to close the gap with Taiwan’s TSMC in the integrated circuit (IC) foundry business while maintaining its leading position in memory chips. The factories will be the core of what the South Korean government hopes will become “the world’s largest high-tech system semiconductor cluster.” Total investment in the scheme is expected to reach 300 trillion won (US$230 billion). That might sound like a lot of money, but Samsung’s semiconductor capital spending was 47.9 trillion won last year, so the target is likely achievable. Inspired by the Hsinchu Science Park in Taiwan, home of TSMC, Samsung’s cluster is expected to attract several chip design companies and suppliers of equipment, components, materials and related services to fill out the supply chain. A Korean version of IMEC, the international semiconductor and nanoelectronics R&D center headquartered in Belgium, is also planned. South Korea’s Ministry of Trade, Industry and Energy says, “The mega cluster will be the key base of our semiconductor ecosystem.” It will be supported by tax incentives, research subsidies and infrastructure provided by the government. Samsung Electronics is the world’s largest semiconductor vendor, with sales of $65.6 billion and 10.9% of the global market in 2022, according to market research organization Gartner. Click here to read... [12]

Digital worlds diverge at World Mobile Congress

A record 85,000 attendees at the Mobile World Congress saw two radically different visions of the digital future.Developed market telecom companies think of 5G mobile broadband as a consumer technology and worry that their market is close to saturation.China’s flagship digital infrastructure company, Huawei, thinks of 5G as an industrial technology and believes that the new digital economy is soon set to launch. Two years ago, Western media wrote obituaries for Huawei after Trump administration sanctions denied the Shenzhen-based company access to US technology, including the fastest new chips with gate widths of 7 nanometers (nm) or less. Huawei, whose handset sales briefly surpassed Apple’s, lost most of its smartphone business due to sanctions, but it has re-emerged as the world’s top provider of telecom infrastructure, a source of cloud-based artificial intelligence (AI) applications for mining, manufacturing and service industries, and a builder of digital technology for specific industries, especially automotive. Huawei officials said they expected the company’s auto business alone to exceed the 2021 peak revenues of its handset business. They also anticipate substantial revenues from its green energy division, which uses AI-enabled solar cells to enhance energy conversion. According to Huawei estimates, more than 10,000 Chinese businesses have built dedicated, or private, 5G networks, including more than 6,000 manufacturing firms. Click here to read... [13]

Top Asian economy urges citizens to abandon Western payment systems

The leader of Indonesia says the country must reduce its dependence on foreign payment systems, to negate potentially disastrous economic consequences should the country ever find itself in the crosshairs of Western sanctions. Addressing a business forum in Jakarta this week, President Joko Widodo argued that Indonesia must shield itself from geopolitical disruptions, citing the sanctions attack on Russia’s financial sector by the US, EU, and their allies over the conflict in Ukraine. “Be very careful. We must remember the sanctions imposed by the US on Russia. Visa and Mastercard could be a problem,” Widodo said on March 15 at a gathering that promoted the use of Indonesian-made products and services. Last year, Indonesia rolled out a Domestic Government Credit Card (KKP) program to facilitate transactions between the central and regional governments. The president urged the public sector to adopt domestic systems, stressing that eventually “everyone should be able to use” locally-issued bank cards so that “we can be independent.” “If we use our own platforms, and everybody is using them, from ministries and local administrations to municipal governments, then we can be more secure,” Widodo said, according to the Jakarta Post. However, in order to compete with Visa and Mastercard, any domestic alternative must be accepted internationally, experts cited by the Post said, expressing doubt that local providers are ready for costly investments in infrastructure upgrades. Click here to read... [14]

Cocaine production at record levels – UN

Production of coca, the base ingredient of cocaine, has risen by 35% compared to pre-pandemic levels, as drug cartels take advantage of receding Covid-19 restrictions to smuggle record amounts of the narcotic across the world, according to a report from the United Nations Office on Drugs and Crime (UNODC). The spike in cocaine production is the sharpest rise since 2016 and comes amid efforts by powerful South American drug cartels to streamline the efficiency of drug labs. “The pandemic was a bit of a blip for the expansion of cocaine production,” noted UNODC researcher Antoine Vella in comments published by The Guardian. He added that it has since “rebounded” to levels higher than before Covid-19. Demand dropped in recent years due to the closure of many bars and nightclubs during lockdowns, the report explains. The findings suggest that cartels were forced to devise alternative methods to distribute the drug during the pandemic after many international flights were grounded and road traffic was heavily policed, forcing them to stockpile the drug. Various drug seizures showed that traffickers had attempted to disguise cocaine in the distribution of everyday items such as inside avocados and even surgical facemasks. One case, officials said, even saw traffickers break the substance down into fabrics to bypass authorities before being reconstituted at its eventual destination. Click here to read... [15]

Sri Lanka secures US$3 billion IMF bailout – now for the difficult debt talks

The International Monetary Fund has approved a US$3 billion loan programme for Sri Lanka, a crucial step for the bankrupt nation to stabilise its economy and begin restructuring its debt. The lender’s executive board approved the 48-month programme in Washington on March 20, and said it will include an immediate disbursement of about US$333 million. “Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis,” the IMF said in a statement. “The economy is facing significant challenges stemming from pre-existing vulnerabilities and policy missteps in the lead up to the crisis, further aggravated by a series of external shocks.” The bailout will inject much-needed funding for a nation grappling with soaring prices, supply shortages and eroded foreign-currency reserves after defaulting on its overseas debt last year. The focus will turn next to debt talks, which Fitch Ratings has said may drag on as creditors’ debate whether to include local-currency sovereign borrowing in the restructuring. The rating company cut its score on Sri Lankan rupee debt in December, saying a default was probable.The country is expected to have about US$56 billion in external debt, or about 75 per cent of its gross domestic product, this year, according to IMF estimates. Sri Lanka’s dollar bonds due in 2030 fell for a third straight session to about 35 cents, according to indicative price data compiled by Bloomberg. The debt was little changed from immediately before the IMF announcement. Click here to read... [16]

Strategic

‘More defensive’ China lowering expectations for talks with US, including Xi-Biden call, observers say

China is lowering its expectations for talks with the United States and has become more defensive, observers said, warning that a planned call between the leaders of the two countries offered little prospect of meaningful gains. While both sides still see the need to repair deteriorating ties, Beijing has come to understand that its relationship with the US would not return to its previous state, according to Alfred Wu, an associate professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “China no longer thinks that it needs to have a relationship like in the past,” he said. Lu Xiang, an expert on US-China relations at the Chinese Academy of Social Sciences, said China was getting impatient because it believed an earlier consensus between the two nations’ leaders had not been implemented. When President Xi Jinping and US President Joe Biden met at the G20 summit in Indonesia in November, the White House said competition between the two nations should not veer into conflict, and a Chinese government statement quoted Biden as saying the US was not seeking a new cold war and did not support independence for Taiwan. “You can say that China is getting impatient,” Lu said. “The meaning of the talks is impacted if the US has no desire to implement the consensus.” Click here to read... [17]

Xi Jinping and Vladimir Putin meet in Moscow, discuss Chinese peace plan for Ukraine

Chinese President Xi Jinping and Russian leader Vladimir Putin met for more than four hours on March 20 in Moscow, discussing topics that included bilateral cooperation, the war in Ukraine and a peace plan proposed by Beijing, according to Russian and Chinese state media. Xi’s visit, which will last for three days, has drawn scrutiny and suspicion from the West. The US and its allies have argued that China is hardly a neutral party given its diplomatic and material support for Russia since it invaded Ukraine a year ago. The Chinese leader said that “rational voices” were gaining sway regarding Ukraine, with a growing number of countries in favour of de-escalation and dialogue and against “adding fuel to the fire”, according to Xinhua. “We encourage President Xi to press President Putin directly on the need to respect Ukraine’s sovereignty and territorial integrity,” Pentagon spokesman John Kirby said in Washington as the two leaders met. “The world and China’s neighbours will certainly be watching closely.”According to Russian media, the leaders’ “informal” talks started at 4.30pm local time on March 20, extended over dinner and wrapped up after four and a half hours, and Putin “went out into the street” to see Xi off as they parted, reportedly a rare move for him. Click here to read... [18]

Iran Agrees to Stop Arming Houthis in Yemen as Part of Pact With Saudi Arabia

Iran has agreed to halt covert weapons shipments to its Houthi allies in Yemen as part of a China-brokered deal to re-establish diplomatic relations with Saudi Arabia, U.S. and Saudi officials said, a move that could inject new momentum into efforts to end one of the region’s longest-running civil wars. For years, Saudi Arabia and Iran have backed opposing sides in the Yemen conflict, fuelling a war that has had disastrous humanitarian consequences and spilled beyond the country’s borders as Houthi forces have launched missile and drone attacks on the Saudi kingdom. If Tehran does stop arming the Houthis, it could put pressure on the militant group to reach a deal to end the conflict, the U.S. and Saudi officials said. A spokesman for the Iranian delegation to the United Nations declined to comment when asked whether Tehran would suspend arms shipments. Tehran publicly denies that it supplies the Houthis with weapons, but U.N. inspectors have repeatedly traced seized weapons shipments back to Iran. After Saudi Arabia and Iran announced the deal to re-establish diplomatic ties seven years after they were severed, officials in both countries said that Iran would press the Houthis to end attacks on Saudi Arabia. One Saudi official said that the kingdom expects Iran to respect a U.N. arms embargo meant to prevent weapons from reaching the Houthis. Click here to read... [19]

Arab Nations Seek to Bring Syria In From the Cold Amid Broad Middle East Realignment

Arab nations that once shunned Syrian President Bashar al-Assad are offering him a deal that would restore ties between Damascus and much of the Middle East while potentially curbing the influence of Iran, according to Arab and European officials. In talks initially led by Jordan, Arab nations have proposed aid worth billions of dollars to help rebuild Syria after the country’s 12-year civil war and have pledged to lobby the U.S. and European powers to lift sanctions on Mr. Assad’s government, the officials said. In exchange, Mr. Assad would engage with the Syrian political opposition, accept Arab troops to protect returning refugees, crack down on illicit drug smuggling and ask Iran to stop expanding its footprint in the nation, the officials said. The talks are at an early stage, and Mr. Assad has shown no interest in political reform or a willingness to welcome Arab troops, said an adviser to the Syrian government, Arab officials and European officials familiar with the talks. In addition, Western powers have shown no inclination to end stringent sanctions over Syria’s human-rights violations. But the devastating earthquakes that struck Turkey and Syria, killing 6,000 in Syria, have given the talks momentum as Mr. Assad seeks to capitalize on the humanitarian disaster to reduce his isolation, these people said. Click here to read... [20]

China to hold GCC-Iran summit: Report

China is planning to host an unprecedented summit attended by senior officials from Iran and its six Arab neighbours of the Gulf Cooperation Council (GCC), according to the Wall Street Journal. The summit would take place in Beijing later this year, after Iran and Saudi Arabia have completed the process of re-establishing diplomatic relations, the United States-based outlet reported on March 12, citing unnamed sources familiar with the plan. Chinese President Xi Jinping was in Saudi Arabia in December where he reportedly pitched the summit to GCC leaders. When Xi officially received Iranian President Ebrahim Raisi in Beijing last month, he tried to contain the fallout of a joint statement he had signed with the Arab leaders that called into question Iran’s ownership of three disputed islands and Tehran’s regional influence and nuclear and military programmes. Raisi reportedly welcomed the proposal, but his administration is pursuing stronger economic ties with Beijing while expecting China to play a bigger role in deadlocked talks over restoring Iran’s 2015 nuclear deal with world powers, which the US unilaterally abandoned in 2018. If China succeeds in getting the GCC states and Iran in one room for dialogue, it would signal another diplomatic victory after Beijing hosted last week’s talks that led to a surprise agreement on ending a seven-year rift between Tehran and Riyadh. Click here to read... [21]

Kishida, Yoon agree on ties, but not on Japanese contributions

Prime Minister Fumio Kishida and visiting South Korean President Yoon Suk-yeol on March 16 agreed on a range of measures to push bilateral relations to a new level. But one measure being pushed by the South Korean public was not cited by either leader. “We will open a new chapter in the Japan-South Korea relationship,” Kishida said at a joint news conference after their meeting in Tokyo. Yoon said the meeting was “a first step to opening a new era of cooperation between South Korea and Japan, having overcome the unhappy past that existed between the two nations.” The meeting came just 10 days after Seoul announced a plan to set up a foundation that would pay compensation to wartime Korean labourers on behalf of Japanese companies that were ordered by South Korea’s Supreme Court to provide the redress. At the news conference, both Kishida and Yoon stressed they did not foresee the foundation later asking the Japanese companies to reimburse whatever payments were made. However, South Korean government officials are hoping for cooperation from Japan to help placate objections raised about the plan to compensate wartime labourers. Specifically, Seoul wants some action on Japan’s part to back the efforts made through the foundation. Public opinion polls in South Korea showed about 60 percent of respondents opposed to the plan. Click here to read... [22]

Australia did not vow to help US defend Taiwan in submarine deal -minister

Australia "absolutely" did not promise to support the U.S. in any military conflict over Taiwan in return for a deal to acquire U.S. nuclear-powered attack submarines, Australia's Defence Minister Richard Marles said on March 19. Australia, the U.S. and Britain unveiled the multi-decade AUKUS project on Monday. Canberra is to buy the U.S. Virginia-class military submarines, with Britain and Australia eventually producing and operating a new submarine class, SSN-AUKUS. Australia's centre-left Labour government says the A$368 billion ($246 billion) deal is necessary given China's military buildup in the region, which it has labelled the largest since World War Two. Asked whether Australia had given the U.S. any commitment to help during a conflict over Taiwan in return for access to the submarines, Marles told ABC television: "Of course not, and nor was one sought". He said there was "absolutely not" a quid pro quo obligation on Australia from the deal. China views democratically governed Taiwan as its own territory and has never renounced the option of force to take the island back. President Joe Biden has said the U.S. would defend Taiwan in the event of "an unprecedented attack" by China. Under the AUKUS deal, which Asian allies welcomed but which Beijing has called an act of nuclear proliferation, the U.S. will sell Australia three subs, built by General Dynamics, in the early 2030s, with an option for Australia to buy two more. Click here to read... [23]

Fear of the dark: Taiwan sees wartime frailty in communication links with world

Taiwan is scrambling to secure its communications with the outside world against an attack by China, but even in peacetime cannot quickly repair critical undersea internet cables and lacks suitable satellite backups, experts and officials say. China, which has never renounced the use of force to bring Taiwan under its control, has ramped up military and political efforts to force the democratically governed island to accept its sovereignty. The Ukraine war has lent new urgency to Taiwan’s efforts to bolster its security, especially against Chinese cyber-attacks or attempts to sever any of 14 cables that connect it to the global internet. “Strategic communications, internally and externally, is what keeps us up at night, particularly in the aftermath of Ukraine,” said Tzeng Yisuo, an analyst at Taiwan’s top military think tank, the Institute for National Defense and Security Research. Taiwan has zeroed in on low-Earth orbit satellites as a solution and has launched a two-year trial program to boost internet services by leaning on international satellite providers. Taiwan’s total satellite bandwidth is about 0.02% of what its undersea cables provide, according to Kenny Huang, chief executive at Taiwan Network Information Center, the island’s internet domain manager. Huang said Taiwan has struggled to attract interest from international satellite companies because of strict regulations on ownership, which limit foreign shares to a maximum of 49%, and a lack of financial sweeteners. Click here to read... [24]

Pakistan faces terrorism surge post-Afghan war

While terrorism had become an almost daily occurrence during the 20-year civil war in neighbouring Afghanistan, Islamabad had assumed that with the end of major fighting in 2021 and the victory of the Taliban, these attacks would end. The Taliban, so the thinking went, were beholden to Pakistan out of gratitude for years of support. Instead, terrorism has actually increased, unleashed by a sudden rise in the number of militant groups that operate from Afghanistan, enjoying the support, or at the very least benign tolerance, of the new government in Kabul. Last year, there were 262 terror attacks in Pakistan, the most in four years, according to data collected by the Pak Institute of Peace Studies in Islamabad. Border clashes between Afghan and Pakistani border troops have also increased, and at least 14 shootouts between Pakistan and Afghan Taliban border guards have taken place since August 2021, according to news reports. Pakistan's leadership appears stunned by the turn of events. "[The] Pakistani people had high expectations from the Afghan Taliban government, which proved to be wrong," said Abrar Hussain, the vice chairman of the Institute of Policy Studies in Pakistan, who served as Pakistan's ambassador to Kabul from 2014 to 2017.Most attacks are blamed on the TTP, an umbrella organization made up of various Islamist militant groups with the combined aim of overthrowing the Pakistani government and enforcing a Shariah regime. Click here to read... [25]

Pakistani High Court suspends arrest warrant for former PM

Pakistan’s High Court has suspended an arrest warrant for former Prime Minister Imran Khan, local news outlet Dawn reported on March 17. This follows a confrontation between police and the politician’s supporters during a failed attempt to enforce the warrant. The Lahore High Court ruled on nine cases against Khan, who is the leader of the Pakistan Tehreek-e-Insaf (PTI) party. The judges granted Khan freedom until hearings on March 24 and March 27 in Islamabad and Lahore, respectively. A video posted on the party’s official Twitter account shows the PTI leader leaving the court in a car following the ruling, on the roof of which was stationed a man carrying an assault rifle. The vehicle was surrounded by a crowd of supporters armed with sticks. This decision comes directly after an attempt to detain the politician at his residence in Lahore ended in a violent clash between the authorities and PTI supporters on March 15. Khan claimed on Twitter that the police’s real intent was to "abduct and assassinate" him rather than merely enforce the warrant. He also claimed that law enforcement used tear gas, water cannons, and even resorted to firing live rounds. This was not the first failed attempt to arrest Khan, as he also avoided police last week, claiming the court lacked the necessary security to protect him from assassination attempts. Click here to read... [26]

Turkey’s President Approves Finland’s NATO Membership Bid

Turkish President Recep Tayyip Erdogan said March 17 that his country would allow Finland to join the North Atlantic Treaty Organization, paving the way for an important enlargement of the alliance in response to Russia’s invasion of Ukraine. Mr. Erdogan announced his decision standing alongside Finnish President Sauli Niinistö in Turkey’s capital Ankara, following nearly a year of diplomatic wrangling after the Turkish leader threatened to block both Finland and Sweden from entering the alliance over concerns about their alleged ties to Kurdish militant groups. The longtime Turkish leader’s opposition to the new members mainly concerned Sweden, which is home to a large Kurdish diaspora including individuals Turkey accuses of terrorist links. The move now leaves Sweden alone awaiting a decision from the Turkish government, splitting the two countries in their joint effort to join the organization. Both countries are also waiting for approval from Hungary.“We have decided to start the ratification process of Finland’s NATO protocol. We hope this process will lead to auspicious results for our countries,” said Mr. Erdogan, speaking in a turquoise room in Turkey’s presidential complex. He added that he sent the matter to Parliament for approval and that he hoped it would be ratified before Turkey’s coming election in May. Finland’s eventual entry into NATO would more than double its current land border with Russia and bring to the alliance one of Europe’s best-defended and best-armed countries. Click here to read... [27]

Poland to Send Four MiG-29 Jet Fighters to Ukraine

Poland said it would send four MiG-29 jet fighters to Ukraine in coming days, making it the first Western nation to supply warplanes to Kyiv, which is preparing a counteroffensive against Russia’s invading forces. The move puts Poland once again at the center of European policy-making on Ukraine, following Warsaw’s successful efforts earlier this year to cobble together a coalition of countries willing to send German-made Leopard 2 tanks to Kyiv. Polish President Andrzej Duda said Poland would reach into its own reserves of the Soviet-built aircraft, which are flown regularly by Ukrainian pilots. He said Poland’s own small fleet had been received from former East German stocks in the 1990s and were currently being serviced and prepared for the handover. “In the coming days, we are handing over four aircrafts to Ukraine in full working order,” he said during a news conference in Warsaw with the newly inaugurated president of the Czech Republic, Petr Pavel. Mr. Duda said other planes were being prepared, suggesting more deliveries would follow. He said the planes in Poland’s stockpile would be replaced first with deliveries of South Korean FA-50s and later American F-35s. The Polish government earlier this week said a coalition of countries was willing to send their Soviet-designed MiG-29 warplanes to Ukraine, and Polish Prime Minister Mateusz Morawiecki said that Warsaw would deliver its own planes in four to six weeks, Polish state news agency PAP reported. Click here to read... [28]

US estimates over 100,000 Ukrainian soldiers killed – Politico

US officials believe that more than 100,000 Ukrainian troops have been killed since the outbreak of the conflict with Russia last February, Politico has reported, without disclosing its sources. Washington is concerned by Kiev’s lack of ammunition, air defenses and experienced soldiers in the run-up to a major Ukrainian offensive expected later in spring, the outlet reported on March 13. “Upwards of 100,000 Ukrainian forces have died in the year-long war, US officials estimate, including the most experienced soldiers,” Politico wrote. “Many of these losses are taking place in Bakhmut,” it added. The city, which Russia calls Artyomovsk, is a key Ukrainian stronghold and logistics hub in the People’s Republic of Donetsk. Russian forces have been advancing on Artyomovsk since August last year, and, according to Wagner Private Military Company chiefEvgenyPrigozhin, have now almost fully encircled the city and taken control of its eastern part. Ukrainian President Vladimir Zelensky has repeatedly insisted that he will not surrender Artyomovsk, despite reports of tensions with US officials, who have allegedly urged Kiev to withdraw and cut its losses. Earlier this week, Zelensky again said that that the defence of the key city would be reinforced. On March 13, the Washington Post reported: “US and European officials have estimated that as many as 120,000 Ukrainian soldiers have been killed or wounded since the start of Russia’s invasion early last year.” Click here to read... [29]

Washington accuses Moscow of downing drone

A US Air Force MQ-9 Reaper surveillance drone was brought down on March 14 morning over the Black Sea, after what its European Command (EUCOM) described as “an unsafe and unprofessional intercept” by two Russian jets. The “Intelligence, Surveillance, and Reconnaissance” platform was “operating within international airspace” when the airplanes approached, EUCOM said in a statement. One of the Su-27s “struck the propeller of the MQ-9,” so the operators ditched the drone into the sea. “Several times before the collision, the Su-27s dumped fuel on and flew in front of the MQ-9 in a reckless, environmentally unsound and unprofessional manner,” the US military complained, accusing the Russians of “a lack of competence.” General James Hecker, the commander of US Air Forces in Europe and Africa, said the drone was “conducting routine operations in international airspace” and that the crash had resulted in a “complete loss” of the MQ-9.EUCOM said the US “routinely” operates drone flights in international airspace to “bolster collective European defence and security” and “support Allied, partner, and US national objectives.” Hecker said the flights would continue, calling on the Russians “to conduct themselves professionally and safely.” The Kremlin and the Russian Defense Ministry have yet to comment on the alleged incident. The US has admitted to providing Ukraine with intelligence, surveillance and reconnaissance information in the conflict against Russia, while insisting it is not a party to the hostilities. Click here to read... [30]

Blinken making ‘historic’ trip to Niger as forces shift in Sahel

Top diplomat Antony Blinken has embarked on his latest official trip to the African continent, where he will become the first secretary of state from the United States to visit Niger. March 16’s historic visit comes as the West African country emerges as an increasingly significant partner to the US and its European allies in the Sahel region, following successive coups in Mali and Burkina Faso and the growing influence of Russia’s Wagner mercenary group. The trip follows US President Joe Biden’s hosting of the US-Africa Leaders Summit in December, part of a pledge to increase US engagement with the continent. Speaking to reporters last week, the US’s Assistant Secretary of State for African Affairs Molly Phee called Niger “one of the most important partners on the continent in terms of security cooperation”, particularly in terms of countering armed groups in the area. Niger borders Mali and Burkina Faso, where the al-Qaeda-affiliated Jama’at Nusrat al-Islam wal-Muslimin (JNIM) and the Islamic State of Greater Sahara, an ISIL (ISIS) affiliate, have jockeyed for power through violence. That, in turn, has inflamed communal tensions driven in part by the ravages of climate change. The violence first took root in Mali in the wake of a 2012 uprising in the country’s north, but it has since spread throughout the Sahel, at times reaching the more prosperous coastal West African countries. Click here to read... [31]

Health

WHO chief predicts end of Covid-19 pandemic

The Covid-19 pandemic will no longer be considered a global health emergency by the end of this year, World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus said on March 14.Speaking at the University of Michigan, where he was awarded the Thomas Francis Jr. medal for his contribution to healthcare, Tedros said he’s “confident that at some point this year we will be able to say that Covid-19 is over as a public health emergency of international concern – and as a pandemic.” The WHO chief noted that the weekly number of reported deaths is now lower than when the organization first used the word “pandemic” to describe the Covid-19 outbreak three years ago on March 11, 2020. Tedros stressed that while the pandemic may end this year, it is important to remember that nearly seven million lives lost to the virus and learn lessons from the outbreak. “If we do not, we will repeat the cycle of panic and neglect that has been the hallmark of the global response to epidemics and pandemics for decades,” he said. The health official outlined three main takeaways from the Covid-19 pandemic. The first was the importance of public health. Tedros called on all countries at all income levels to invest in a robust primary healthcare system, capable of detecting outbreaks at the earliest possible stages. Click here to read... [32]

Joe Biden signs bill requiring declassification of Covid origins information

US President Joe Biden on March 20 signed a bill that requires declassification of information related to the origins of the coronavirus that causes Covid-19, the White House said. Biden said he shared Congress’ goal of releasing as much information as possible about the origin of Covid-19. “In implementing this legislation, my administration will declassify and share as much of that information as possible, consistent with my constitutional authority to protect against the disclosure of information that would harm national security,” Biden said in a statement. The bill sailed through the Senate and House of Representatives without opposition before being sent to the White House. Washington has been conducting a highly politicised debate about the origins of the coronavirus pandemic almost since the first human cases were reported in the Chinese city of Wuhan in late 2019, amid calls from both Biden’s fellow Democrats and Republicans to push back harder against a rising China. The debate was refuelled last month, when the Wall Street Journal reported that the US Energy Department had assessed with that the pandemic likely arose from a Chinese laboratory leak, an assessment Beijing denies. The department made its judgment with “low confidence” in a classified intelligence report. Click here to read... [33]