Global Developments and Analysis: Weekly Monitor (22-28 January 2024)

Economic

Asia Inc. heads to Washington as focus turns to trade, tariffs and Trump

It was the wee hours of Jan. 16 when Rieko Shimizu clicked "send" on an email to her corporate headquarters in Japan. Like most Asian companies with offices in Washington, Shimizu, who represents Japanese drink maker Suntory in the U.S. capital, had quickly prepared a summary of the Iowa Republican caucuses that had concluded hours earlier. Former President Donald Trump had won by a 30-point margin, and the implications were being digested across the world. A Trump victory in November’s presidential election could have a decisive impact on the U.S. economy, not to mention relations with some of Suntory’s other major markets, including India, the world's biggest whisky consumer. Japan’s largest whisky maker is one of many Asian companies that have recently opened offices or hired representatives in the U.S. capital. Other newcomers include Japan's top semiconductor production equipment maker, Tokyo Electron; megabank Sumitomo Mitsui Banking Corporation; and South Korean conglomerate LG. Sony has reopened an office after an eight-year hiatus, and India's Adani Group has hired veteran lobbyist Anurag Varma, a former India lead at the Washington lobby firm Squire Patton Boggs, to represent the company to U.S. policymakers. Many Asian companies have learned the hard way that a lack of access in Washington can be costly, particularly as the U.S. government ramps up the use of sanctions. Click here to read… [2]

Russia’s planned gas pipeline to China faces construction delay - FT

Mongolian Prime Minister L. Oyun-Erdene said construction of Russia's planned new Power of Siberia-2 gas pipeline to China, which was expected to start this year, may be delayed, the Financial Times reported on Jan 28. Russia has been in talks to build a new pipeline to carry 50 billion cubic meters of gas a year from northern Russia to China via Mongolia, almost as much as the now-idle Nord Stream 1 pipeline under the Baltic Sea that was damaged in 2022. China and Russia have yet to agree on key details of the mammoth project, he told the paper, adding that record global gas prices during the past two years had complicated talks. Gazprom, which will operate Power of Siberia-2 has said it aims to start delivering gas by 2030. But agreement on key issues, including pricing remains elusive. "Those two sides still need more time to do more detailed research on the economic studies," Oyun-Erdene told the FT. "The Chinese and Russian sides are still doing the calculations and estimations and they are working on the economic benefits," he said. Gazprom and the Kremlin did not respond to a Reuters request for comment. China’s foreign ministry could not be immediately reached. Click here to read… [3]

America’s Remarkably Resilient Economy

Jan 25’s fourth-quarter GDP report no doubt elated the White House and Federal Reserve. The economy grew at a solid 3.3% clip last quarter and 3.1% over the past year while inflation is now nearing the central bank’s 2% target. The question is whether—and for how long—consumers and government can sustain the expansion. Maybe the best news in the report is that the personal consumption expenditures (PCE) price index—the Fed’s preferred inflation gauge—rose by only 1.7% in the fourth quarter, down from 2.6% in the third. Excluding food and energy, the PCE rose 3.2% year-over-year. Declining inflation helped lift real disposable personal income by 2.5% in the fourth quarter. A buoyant labour market and rising real wages (at long last) are also boosting purchasing power while Americans continue to spend down their pandemic savings. Consumer spending continues to drive GDP growth, contributing 1.91 percentage points of the 3.3% in the fourth quarter. Net exports added 0.43 points while government spending chipped in 0.56. States and localities are blowing through federal pandemic and infrastructure money. Over the last two years, state and local government spending has contributed more than twice as much to GDP than from 2017 to 2021. Click here to read… [4]

China’s $6 Trillion Stock Wipeout Exposes Deeper Problems for Xi

China’s $6 trillion stock market rout reveals a painful truth for President Xi Jinping’s government: People are hopelessly gloomy about the outlook for the world’s second-largest economy, and their pessimism is becoming increasingly hard to ignore. This month’s heavy selloff in China’s benchmark CSI 300 Index brings its plunge to a brutal 40% over the past three years, deepening anguish in a market dominated by mom-and-pop investors. A government rescue package under consideration backed by about 2 trillion yuan ($280 billion), first reported by Bloomberg News, and a sudden bank reserve ratio cut show that authorities are growing anxious to stem the rout. But international and retail investors alike remain skeptical that these measures will be enough to prompt a sustained bounceback. Compared to the country’s yearslong property crisis and demographic challenges, a stock market wipeout might look like a relatively superficial problem. Equities represent a fraction of the household wealth that real estate does, and there are no signs of systemic risk that might endanger financial stability. But in a country where government control of financial commentary and economic data is tightening, markets provide a very public reminder of the problems that dog the real economy, from slumping house prices to rising trade tensions. The selloff risks damping consumer spending and business investment, making the economy’s troubles even worse. Click here to read… [5]

China expands access to loans for property developers, acting to end its prolonged debt crisis

China has rolled out new rules meant to expand access to commercial bank loans for property developers as Beijing doubles down on its effort to end a prolonged crisis in the real estate industry. The policies will allow real estate companies to use bank loans pledged against commercial properties such as offices and shopping malls to repay their other loans and bonds and to cover operating expenses. They were announced late Jan 24 by the People’s Bank of China, the National Financial Regulatory Administration and the Finance Ministry. Beijing has moved this week to stabilize ailing financial markets and boost the economy by freeing up more money for lending in various ways. That includes cutting required bank reserves. The flurry of new measures and pronouncements from senior Communist Party officials about the need to stabilize financial markets and build confidence in the economy, the world’s second largest, appears to reflect a renewed determination to get growth back on track. Dozens of developers have defaulted on their debts after the government cracked down on excessive borrowing in the industry several years ago. The largest, China Evergrande, is still trying to resolve more than $300 billion in debts and a Hong Kong court is due to hold a hearing on its restructuring plans next week. Click here to read… [6]

Chinese Engineers Are Keeping Russia’s Metal Furnaces Firing

Magnitogorsk, in the Ural mountains, was developed as a symbol of Soviet industrial might and its capacity for economic modernization. Today, a new, 75 billion-ruble (roughly $840 million) coking plant in the steel town is being built by a Chinese engineering giant and hundreds of Chinese workers. The contract between Magnitogorsk Iron & Steel Works PJSC, known as MMK, and state-owned Sinosteel Engineering & Technology Co. was signed before Russia’s invasion of Ukraine and links between the two predate that. But since Chinese engineers and builders began arriving in large numbers to speed up construction last year, the project has been trumpeted by officials on both sides as emblematic of closer ties. A hefty investment when compared to most past Chinese activity in Russia, Magnitogorsk is just one of dozens of examples from across the country of Beijing’s engineers and machines keeping Russian heavy industry alive. It’s a trend that owes much to China’s technological prowess but also to overcapacity at home and Moscow’s urgent need to keep producing the iron and steel its wartime economy requires. With few choices for Russia, bonds are strengthening. Beyond the Urals, the country’s biggest mining company, MMC Norilsk Nickel PJSC, turned to China for help on a sulphur dioxide emissions-capture operation after European contractors stepped away in 2022, with the project still incomplete. Click here to read… [7]

Japanese business leaders return to China seeking to boost cooperation

A delegation of about 200 Japanese business leaders and CEOs returned to China this week in their first visit since 2019 as they sought to bolster economic relations in the face of geopolitical headwinds that have strained bilateral ties. Japanese economic delegations had visited China every year since 1975, but those visits lapsed during the COVID-19 era when China largely shuttered its borders due to its stringent pandemic policies. On Jan 25, delegates from the powerful Keidanren, as the Japan Business Federation is known, and Japan-China Economic Association met Chinese Premier Li Qiang at the Great Hall of the People. “Premier Li Qiang said China-Japan relations are currently in a critical period of inheriting the past and ushering in the future,” Wang Wenbin, a Chinese foreign ministry spokesperson, told a regular news conference. “It is hoped that the Japanese economic community will actively exert an influence on win-win cooperation between China and Japan.” Beijing-based Toshihiro Ueda, vice chairman of the Japanese Chamber of Commerce in China, told Reuters that the meeting with Li and other sessions “were quite significant in confirming both sides’ desire for better business relations”. “We discussed quite frankly broad topics and shared each other’s views to tackle challenges,” said Ueda, who was part of the talks. Click here to read… [8]

Japan shares hit 34-yr highs, yen steady ahead of BOJ decision

Japanese shares surged to fresh 34-year highs and the yen steadied on Jan 23, hoping the Bank of Japan will not rock the boat by pivoting away from its super easy policy any time soon, while Chinese stocks extended declines after a brutal session. Japan’s Nikkei rose 0.6% to the highest level since February 1990, bringing the year-to-date gains to 9.9%. Meanwhile, MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.2% higher but was down more than 6% this year due to the tumble in Chinese shares. The yen languished at 148.12 per dollar, having slid 5% this year. The BOJ is expected to retain its ultra-easy monetary settings later in the day, as policymakers assess the progress made by the economy towards meeting the conditions for phasing out the decade-long accommodative policy. None of the economists polled by Reuters expect the central bank to end its negative rate policy this time, though many see it happening in April. Governor Kazuo Ueda will hold a press conference after the decision, with traders focusing on the inflation outlook and any signs of imminent policy change. "The market will probably be disappointed again because we don’t believe that Ueda will give a clear signal of policy normalization in the near future," said Robert Carnell, regional head of research, Asia-Pacific, at ING. Click here to read… [9]

Russia’s earnings from food exports hit record high – minister

Russia raked in record earnings from agricultural exports last year, Agriculture Minister Dmitry Patrushev has announced, citing preliminary estimates. Speaking at a ministerial meeting on Jan 24, Patrushev said that cross-border sales of agricultural goods brought Moscow more than $45 billion in 2023. He noted that the figure is likely to rise once final calculations are made. “The production indicators have allowed Russia to reaffirm its status as a net exporter of agricultural products,” the ministry’s press service cited Patrushev as saying. The minister noted that Russia’s grain harvest amounted to 147 million tons last year, just short of the 157 million record reached in 2022. Milk production increased by 500,000 tons, and meat production surged by 300,000 tons. Fish production was the highest in 30 years, at 5.3 million tons. Output of salmon was particularly high at over 600,000 tons, making Russia the world's top salmon producer, according to the minister. The Agriculture Ministry earlier estimated that Russia’s grain for export this growing season totalled 60 million tons. The country has been the world’s largest exporter of grain in recent years thanks to bumper harvests and attractive pricing, despite Western sanctions that have hampered the country’s foreign trade. Russia has also been supplying free grain to a number of African countries that are facing food insecurity. Click here to read… [10]

UK insured $130 billion worth of Russian crude – CREA

The UK has insured around a third of all Russian seaborne oil shipments since the start of the Ukraine conflict despite sanctions, according to a report by the Centre for Research on Energy and Clean Air (CREA). British firms have covered over £102 billion ($130 billion) worth of Russian oil between March 2022 and November 2023, the CREA revealed in its analysis published last week. “Despite the EU/G7 countries’ sanctions on Russian oil, a majority of vessels carrying Russian oil and oil products are owned and/or insured in the EU and G7 countries,” the report reads. The price cap on Russian seaborne oil exports was introduced by the EU and G7 countries in December 2022 and was followed by similar restrictions on exports of Russian petroleum products. Under the measure, Western firms are banned from providing insurance and other services on shipments of Russian crude, unless the cargo is purchased at or below $60 per barrel, a level below the current market price. The report found that around 33% of all seaborne exports of Russian oil and petroleum products have been transported on tankers insured in the UK since the sanctions took effect until early November 2023. It is not illegal to transport or insure Russian oil as long as it is sold below the price cap, Alun Cairns, Conservative MP, said, adding firms must be aware of the possibility that the price ceiling could be breached. Click here to read… [11]

China Overtakes Europe in Clean Energy Tech Research

China has become a powerhouse in clean energy, and has overtaken the EU on clean technology research; a paper prepared for the European Commission has shown. “China has caught up with the EU in R&D expenditure. While Chinese R&D intensity more than doubled since 2000, EU R&D intensity grew much slower. As a result, China caught up with the EU while the US keeps a consistent lead,” according to the brief on the EU-China exposure in trade, investment, and technology. “China is increasingly becoming a world leader in science and innovation, for several critical technologies outlined in the 2023 Commission Recommendation on critical technology areas for the EU's economic security,” the authors of the study for the Commission wrote. “This adds an additional layer of exposure, potentially deepening risks related to the resilience of supply chains, security of critical infrastructures, weaponization of economic dependencies or economic coercion,” they added. The study also warned that the EU’s exposure to China is becoming increasingly technological. “China wants to win the global race for leadership in key technologies, which it sees as of critical importance for its development and security,” the paper notes. According to the study for the Commission, “China’s dominant position in manufacturing is particularly apparent in the area of clean tech.” The EU is pushing forward to protect its clean energy manufacturing from Chinese competition by adopting measures to help its EV, solar, and wind industries. Click here to read… [12]

Toyota Chairman Questions EV Market Future

Toyota's chairman and former CEO, Akio Toyoda, is at it again: providing the public with a dose of reality that electric vehicles will never dominate the global car market. Toyoda, grandson of the founder of the world's largest car manufacturer, expressed at a business event this month, as reported by The Telegraph, that EVs will never capture 30% of global market share. He explained that petrol-burning vehicles and hybrids, along with hydrogen fuel cell vehicles, will dominate. Toyoda made the point: How can EVs be the future when a billion people on Earth have no electricity? Data from Statista shows nearly a billion people in the world are living without electricity. He noted: "Customers — not regulations or politics — should make that decision." Over the years, Toyota has openly demonstrated defiance against governments and NGOs pushing for 100% EVs in just a few decades, if not earlier. In October, Toyoda told reporters at an auto show in Japan that EVs aren't the silver bullet against the supposed ills of carbon emissions they're often made out to be. Toyota has a history of being at the forefront of adopting new technologies. However, its slow EV adoption is because of its mistrust of lithium-ion batteries, and it has positioned itself to be a leader in hybrid vehicles. Perhaps Toyoda has been vindicated to some extent as EV demand slumps. Click here to read… [13]

US Plans ‘Bigger Picture Exam’ of Boeing Issues, Buttigieg Says

The Biden administration will undertake a wide-ranging review of oversight and quality control at Boeing Co. after the plane-maker’s latest missteps, Transportation Secretary Pete Buttigieg said Jan 24. The Federal Aviation Administration is examining specific manufacturing concerns related to Boeing’s 737 Max 9 aircraft after an incident involving a fuselage section that ripped away from an Alaska Airlines plane midflight, “but also a bigger picture examination of any and all quality issues,” Buttigieg said. “I think that’s going to include a structural discussion about how best to conduct this kind of oversight and going forward,” he continued. The comments signal that Boeing faces long-lasting repercussions from the blow-out of a door plug minutes after the Alaska Airlines jet took off from Portland on Jan. 5. Federal regulators have launched a far-reaching investigation of Boeing’s control over quality in its factories and supply chain after early clues and a whistleblower’s allegations pointed to a manufacturing error within the planemaker’s Renton, Washington plant. Buttigieg spoke to reporters a day after FAA administrator Mike Whitaker said his agency was evaluating whether there were systemic issues at Boeing. A broader inquiry could further pressure the aviation giant, which has faced intensified scrutiny since a pair of fatal crashes to the Max lines in 2018 and 2019. Click here to read… [14]

U.N. aid agency says Gaza operation is 'collapsing' over funding cut wave

The head of the main U.N. aid agency in the war-battered Gaza Strip warned late Jan 27 that its work is collapsing after nine countries decided to cut funding over allegations that several agency employees had participated in the deadly Hamas attack against Israel four months ago. Philippe Lazzarini, head of the U.N. agency for Palestinian refugees, said he was shocked such decisions were taken as "famine looms" in the ongoing Israel-Hamas war. "Palestinians in Gaza did not need this additional collective punishment," he wrote on X. "This stains all of us." His warning came a day after he announced he had fired and was investigating several agency employees over allegations that they participated in the Oct. 7 attack on Israel that sparked the war. The United States, which said 12 agency employees were under investigation, immediately said it is suspending funding, followed by several other countries, including Britain, Italy and Finland. The agency, which has 13,000 employees in Gaza, most of them Palestinians, is the main organization aiding Gaza's population amid the humanitarian disaster. More than 2 million of the territory's 2.3 million people depend on it for "sheer survival," including food and shelter, Lazzarini said, warning this lifeline can "collapse any time now." Click here to read… [15]

Biden Pauses Approvals for LNG Exports

The Biden administration effectively froze the approval process for new plants to export U.S. liquefied natural gas, bowing to demands from environmental groups and angering oil-and-gas companies. President Biden said Jan 26 the administration will pause export application reviews as it takes stock of the country’s newfound status as the world’s largest LNG exporter. “We will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment. This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time,” he said. In a call with reporters Jan 25 previewing the announcement, Energy Secretary Jennifer Granholm said the process wouldn’t affect already authorized exports or gas exports to U.S. allies, including Europe, which has relied heavily on American gas since Russia’s invasion of Ukraine. The decision delivers a significant victory for environmental groups. Alongside some Democratic lawmakers, they have for months pressured Biden to halt plans to build new LNG plants on the Gulf Coast, arguing that the expansion would have a harmful effect on the climate, the U.S. economy and local communities. “With this decision, President Biden—who already can claim to have done more to bolster clean energy than any of his predecessors—has also done more to check dirty energy, halting the largest fossil fuel expansion in history,” said climate activist and author Bill McKibben. Click here to read… [16]

Strategic

Xi-Biden call at center of China-U.S. talks in Bangkok

China's top diplomat, Wang Yi, and U.S. national security adviser Jake Sullivan met for over 12 hours across two days in Bangkok, a senior U.S. official told reporters Jan 27, where they agreed to hold a phone call between U.S. President Joe Biden and Chinese President Xi Jinping in the coming months. The meetings between the top advisers, held on Jan 26 and Jan 27, come two and a half months after the leaders met in Woodside, California, on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco. At Woodside, Biden and Xi agreed to maintain open lines of communication, continue high-level visits and to launch working groups on various issues. In Bangkok, the sides discussed the next steps toward holding a U.S.-China dialogue on the safety and risks posed by advanced forms of artificial intelligence in the spring. The countries will also launch a working group on stopping drug trafficking on Jan. 30. Wang and Sullivan held "candid, substantive and constructive discussions" on global and regional issues, including the Ukraine war, the Middle East, North Korea, the South China Sea and Myanmar, a White House readout said. They also discussed Taiwan, with Sullivan underscoring the importance of maintaining peace and stability across the Taiwan Strait, the readout said. Click here to read… [17]

US Supreme Court allows Biden to dismantle Texas border fence

The US Supreme Court has authorized federal agents to remove razor wire barricades installed along the Mexican border by Texas Governor Greg Abbott. Amid record numbers of illegal border crossings, Republicans argue that President Joe Biden is “actively aiding and abetting” an “invasion.” In a 5-4 decision on Jan 22, the court granted an emergency appeal by the Biden administration and ruled that Abbott must allow federal authorities access to the border. Though nominally conservative, Justices Amy Coney Barrett and John Roberts sided with their three liberal colleagues to grant the appeal. None of the justices explained their decision in writing. Abbott moved Texas National Guard troops to the border in 2021 and installed around 30 miles of razor-sharp concertina wire at the popular crossing spot of Eagle Pass. When Biden’s Department of Homeland Security ordered Border Patrol agents to begin cutting the wire last year, Texas Attorney General Ken Paxton sued the Biden administration, accusing the agents of damaging state property in order to “assist” migrants to “illegally cross” the border. The Biden administration argued that an unfavourable decision would allow “state-law regimes” to supplant federal immigration law and hamper federal agents’ ability to “quickly respond to emergency situations” along the border. Click here to read… [18]

Blinken looks to bolster West African security partnerships after setbacks

This week during his visit to the Ivorian capital Abidjan, US Secretary of State Anthony Blinken pledged $45m to boost coastal West African security, extending funding of an ongoing programme in the region to $300m.Blinken, who also praised counterinsurgency measures by the Ivorian military in warding off armed groups despite being wedged between Mali and Burkina Faso, hotspots for violence in the Sahel, then jetted off to Abuja. There, he met Bola Tinubu, Nigeria’s president and chair of the Economic Community of West African States (ECOWAS), as part of a four-nation tour that also includes Angola and Cape Verde. Simultaneously, Linda Thomas-Greenfield, US ambassador to the United Nations, is also on a separate tour: After attending the inauguration of Liberia’s new president Joseph Boakai, she is also visiting Guinea Bissau and Sierra Leone. The flurry of diplomatic trips is officially billed as a show of support to democracies in the region. But analysts say the visits are fundamentally attempts by the US to bolster or build new security partnerships in a region witnessing waning Western influence in recent months. Save for Angola, all the countries on both tours are in West Africa, which has witnessed a spate of recent military takeovers and violence by multiple armed groups. Click here to read… [19]

US, Iraq begin formal talks on winding down US-led military coalition

The United States and Iraq have held a first round of talks on the future of US and other foreign troops in the country, with Baghdad expecting discussions to lead to a timeline for reducing their presence. Iraqi Prime Minister Mohammed Shia al-Sudani as well as top-ranking officials from both the Iraqi armed forces and the US-led coalition met in Baghdad on Jan 27. The joint commission began “the commencement of the first round of bilateral dialogue between Iraq and the United States of America to end the Coalition in Iraq”, Al-Sudani’s office said in a statement. “Military experts will oversee ending the military mission of the Global Coalition against Daesh [ISIL], a decade after its initiation and after its successful achievement of its mission in partnership with Iraqi security and military forces,” it added. Currently, there are about 2,500 US troops still deployed in Iraq as part of the coalition that was formed in 2014 to help the Iraqi government defeat ISIL. The US says its aims to set up a committee to negotiate the terms of the mission’s end were first discussed last year. But as Israel’s war on Gaza ramps up, US forces in Iraq and Syria have faced frequent attacks by Iran-allied groups, resulting in US retaliatory attacks and Iraqi complaints of US “aggression” against its territory. Click here to read… [20]

World reacts to ICJ interim ruling in Gaza genocide case against Israel

The International Court of Justice (ICJ) delivered its interim ruling on the emergency measures requested by South Africa in its genocide case against Israel over its war in Gaza. The top United Nations court in The Hague on Jan 26 did not order a ceasefire in Gaza but told Israel to take measures to prevent and punish direct incitement of genocide in the besieged enclave. ICJ President Joan Donoghue noted that the court had found sufficient evidence of dispute for the genocide case and said it would not throw it out. Israel has also been ordered to allow humanitarian aid into Gaza and has been asked to report back to the court within a month about how it is upholding the court’s orders. Here are some global reactions: Palestine’s Ministry of Foreign Affairs and Expatriates welcomed the ruling, saying it is an “important reminder” that no state is above the law. Prime Minister Benjamin Netanyahu slammed the ruling as “outrageous”. The South African government called the ruling a “decisive victory” for international law and said it hoped Israel would not act to frustrate the application of the court’s orders. The US said the ICJ ruling was consistent with Washington’s view that Israel has the right to take action, in accordance with international law, to ensure the October 7 attack cannot be repeated. Click here to read… [21]

Chinese Foreign Minister Visits North Korea in Latest Diplomacy Act

North Korea said Jan 26 it was hosting a visit by a Chinese government delegation led by Vice Foreign Minister Sun Weidong, as it continues its efforts to strengthen ties with Beijing and Moscow in the face of deepening confrontations with Washington. The North’s official Korean Central News Agency said Sun’s delegation arrived in the capital, Pyongyang, on Jan 25 after crossing the land border between the countries. The report didn’t provide further details about the visit.North Korean leader Kim Jong Un has been trying to boost the visibility of its partnership with China and Russia as he tries to break out of diplomatic isolation and strengthen his regional footing by joining a united front against the United States. Kim travelled to Russia’s Far East in September for a rare summit with Russian President Vladimir Putin and some experts say he is also likely seeking a meeting with Chinese President Xi Jinping. While Kim has prioritized his ties with Russia, which has raised concerns about an arms cooperation that would help fuel Putin's war on Ukraine, the North Korean leader has also invited senior Chinese officials to major state events in recent months while vowing to strengthen bilateral relations. Click here to read… [22]

Japan ruling party OKs proposals for factions to continue as 'policy groups'

Japan's ruling Liberal Democratic Party on Jan 25 approved internal reform proposals that stopped short of demanding the dissolution of its factions, following a political funds scandal involving some of the intraparty groups. An interim report compiled by the party's reform panel, presided over by Prime Minister Fumio Kishida, pledged to move away from factions as vehicles for securing funds and allocating important government and party posts for lawmakers, while allowing them to continue as "policy groups."Later in the day, Kishida denied he intends to resign over the scandal, saying, "I will fulfill my responsibility by leading discussions" on how to materialize the interim report aimed at restoring public trust in the LDP. Opposition lawmakers and critics have expressed doubt about the effectiveness of the proposals, arguing it is hard to distinguish between factions and policy groups, and that the proposals lack substantial solutions to prevent the abuse of political funds. The LDP has come under intense scrutiny over the fundraising scandal, with the largest faction, formerly led by the late Prime Minister Shinzo Abe, suspected of failing to report revenue from fundraising parties over many years and accumulating hundreds of millions of yen in slush funds. The report calls for a ban on factions holding political fundraising parties, which have come to be associated with slush funds amid the latest scandal. Click here to read… [23]

UK needs bigger military – US Navy chief

The UK should reassess the size of its armed forces, US Navy Secretary Carlos Del Toro has said. During a visit to the Royal United Services Institute in London on Jan 25, the official pointed to situations the US and its allies see as threats, including the escalation in the Middle East, as well as the policies of Russia and China. Asked if the US is concerned whether Britain’s army has become too small, Del Toro replied: “I think it’s important for the United Kingdom to reassess where they are today, given the threats that exist today.” In his speech on Jan 25, he argued that amid “near-term threats to the UK and the US,” investments in the Royal Navy are “significantly important,” noting that the US has “continued to make significant investments in national security,” even amid economic challenges. Del Toro claimed that the threats include the escalating crisis in the Middle East, Yemen, Iran, China, and Russia. Asked whether US and UK operations in the Middle East – currently a naval and bombing operation against Yemen’s Houthis – could widen to include Iran, Del Toro said, “nothing is off the table.”A shortage of sailors forced the Royal Navy to decommission two of their frigates, the HMS Westminster and HMS Argyll, earlier this month, and the overall army numbers are reaching levels not seen since the 18th century. Click here to read… [24]

Iran President Visits Turkey for Security Talks

The presidents of Iran and Turkey discussed the war in Gaza and cooperation against Kurdish militants during a meeting on Jan 24, as the neighbours signed several agreements to boost cooperation from trade to energy. Talks with Iranian President Ebrahim Raisi focused on the conflict between Israel and Hamas as well as efforts to counter the Kurdistan Workers’ Party, or PKK, in northern Iraq and its Iranian wing, Turkish President Recep Tayyip Erdogan said. Raisi and Erdogan oversaw the signing of 10 memoranda of understanding to deepen ties spanning transport, tourism and energy with the aim of increasing bilateral trade to their $30 billion target. “We are attaching importance to deepen our relations with Iran based on mutual trust and common interests,” Erdogan said in televised comments. “We’ve emphasized the need for Iran to increase its support in fight against the PKK” and affiliated militants in Iran and Syria, he said. Dozens of Turkish soldiers have died in PKK raids in northeast Iraq in recent months, following an expansion of Turkish army posts in the area, they added, speaking on condition of anonymity due to the sensitivity of the information. The PKK has fought a decades-long war with Turkey for autonomy. Click here to read… [25]

Palestinian Authority seeks postwar role in Gaza governance, PM says

The Palestinian Authority seeks to be involved in governing the Hamas-led Gaza Strip after the war between Israel and Hamas, Prime Minister Mohammad Shtayyeh said Jan 23, calling it an "integral part of the Palestinian territories."Shtayyeh, the Palestinian Authority's No. 2 official behind President Mahmoud Abbas, spoke with Nikkei in an exclusive interview in Ramallah, the body's administrative center in the West Bank. The Palestinian Authority was created under the 1993 Oslo Accords -- an agreement meant to facilitate a two-state solution, or a separate Palestinian state alongside Israel -- and now governs part of the West Bank with the support of much of the international community. While this body initially administered Gaza as well, the territory has been de facto controlled by Hamas since 2007.Shtayyeh strongly criticized the blocking of aid shipments into Gaza by Israel amid the humanitarian crisis there, saying that "we need more entry points" into the territory. He also argued that Israel should withdraw from Gaza after the war with Hamas. The prime minister said cooperation from the whole international community will be crucial to achieve a two-state solution. He called for official recognition of Palestinian statehood by the U.S., Japan and European countries, as well as full membership in the United Nations, where it is currently an observer state. Click here to read… [26]

65 Ukrainian POWs killed in Russian plane crash – MOD

A Russian heavy transport plane carrying several dozen Ukrainian prisoners of war has crashed in Belgorod Region, which borders Ukraine, Moscow has confirmed. Local Governor Vyacheslav Gladkov has said all those on board were killed. In a statement on Jan 24, the Russian Defense Ministry said that an IL-76 cargo aircraft carrying 65 captured Ukrainian service members as well as six crew members and three people accompanying the POWs went down during a pre-planned flight at around 11am local time. It added that the prisoners were being transported to Belgorod region for an exchange. Defense officials also noted that Moscow has dispatched a commission to establish the cause of the incident. Telegram channel 112, citing a source, had earlier reported that the crash took place near the village of Yablonovo, about 90 km from the border. Meanwhile, the Ukraine-based Ukrainskaya Pravda newspaper reported, citing sources in Kiev’s military, that the aircraft had been destroyed by Ukrainian forces, claiming that the plane had been carrying S-300 air defense missiles rather than prisoners. A few minutes later, it removed the mention of Kiev’s role in the downing of the aircraft, stating only that its military sources had confirmed the crash. Russian MP Andrey Kartapolov said that two planes had been carrying Ukrainian POWs, and that Moscow had to urgently divert the second IL-76, with 80 captured troops on board, out of the danger zone. Click here to read… [27]

Israel Struggles to Destroy Hamas’s Gaza Tunnel Network

As much as 80% of Hamas’s vast warren of tunnels under Gaza remains intact after weeks of Israeli efforts to destroy them, U.S. and Israeli officials said, hampering Israel’s central war aims. Thwarting Hamas’s ability to use tunnels is the keystone to Israel’s effort to capture top Hamas leaders and rescue the remaining Israeli hostages, Israeli officials have said. And Israel has said it has conducted strikes on hospitals and other key infrastructure in its pursuit of the tunnels. Disabling the tunnels, which run for more than 300 miles under the narrow strip—or roughly half the New York City subway system—would deny Hamas relatively safe storage for weapons and ammunition, a hiding place for fighters, command-and-control centers for its leadership, and the ability to manoeuver around the territory unexposed to Israeli fire, Israel has said. Israel has sought various methods to clear the tunnels, including installing pumps to flood them with water from the Mediterranean, destroying them with airstrikes and liquid explosives, searching them with dogs and robots, destroying their entrances and raiding them with highly trained soldiers. More than 25,000 people, the majority women and children, have been killed in Gaza since the start of hostilities, according to Palestinian authorities. Those figures don’t distinguish between combatants and civilians. Click here to read… [28]

Great power lite? Why China is reluctant to wade into the Red Sea crisis and join US-led attacks on Houthis

For about two months, Iran-backed, Yemen-based Houthis have been attacking merchant ships in the lower Red Sea with drones and missiles. The rebel group says the action is in response to the Israel-Gaza war and it is only targeting Israeli-linked vessels or those heading to Israel. But ships with no such links have been attacked, prompting major transport companies, including Chinese state-owned giant Cosco, to reroute at considerable expense. In response, a US-led coalition of more than 20 countries ranging from Britain to Bahrain has banded together to safeguard commercial traffic in the Red Sea, including launching air strikes against the Houthis. But not China. Instead, Beijing’s approach has been to call for an end to the attacks on the ships and express concern over the escalating situation. Observers say China’s cautious response is consistent with its general approach to Middle East crises and is unlikely to change unless the attacks dent its trade and commercial interests. But, they say, the caution also reflects a lack of leadership and capacity in a country seeking to establish itself as a world power.“It certainly does not show any appetite for acting as a major responsible power,” said Ori Sela, an associate professor at Tel Aviv University. Click here to read… [29]

Iran-Pakistan Tensions Test Beijing's Diplomatic Prowess

Air strikes and diplomatic sparring between Iran and Pakistan have raised difficult questions for China and its influence in the region amid growing fears the upheaval sweeping across the Middle East could spread. Since the tit-for-tat strikes on January 16 and 18 against militant and separatist groups, Islamabad and Tehran have signaled they want to de-escalate the situation and that their foreign ministers will hold talks in Pakistan on January 29.But the attacks have exposed the fine line between peace and conflict in the region and put the spotlight on China, a close partner of both countries, to see if it can use its sway to ramp down tensions and avoid a conflict that would jeopardize Beijing's economic and geopolitical interests in the region."For China, the stakes are high and they really can't afford for things to get any worse between Iran and Pakistan," Abdul Basit, an associate research fellow at Singapore's S. Rajaratnam School of International Studies, told RFE/RL. China has tens of billions of dollars of investments in Iran and Pakistan and both countries are high-level partners that benefit from Chinese political and economic support. Following the missile-strike exchange, China's Foreign Ministry called for calm and said it would "play a constructive role in cooling down the situation," without giving details. Click here to read… [30]

China is facing more overseas security risks in year of elections, report says

China could face more uncertainty and challenges in safeguarding its overseas interests this year, as more than 60 countries head to the polls in 2024, according to a Chinese think tank. With elections to be held in countries including the United States, Russia and India, it “will usher in a new phase in the geopolitical game”, Renmin University’s China Overseas Security Research Institute (COSRI) said in its latest report. The report, which was released on Jan 24, analyses China’s relationships with 193 countries – 60 of them with elections coming up – and their ties with the US. It notes that countries such as Togo and Rwanda in Africa, and Tajikistan in Central Asia, could see a transition of power after decades under their current leaders. The researchers named 29 countries – including the US, India, Ukraine, Sierra Leone and Zimbabwe – as “extremely high” overseas security risks for China. Some 63 nations were considered “high” risk, including Japan, Russia, the United Kingdom and Myanmar. The risk was “moderate” in Thailand, France, Indonesia, Saudi Arabia and another 70 countries, while Singapore, the United Arab Emirates, New Zealand and 24 other nations were in the “low” risk category.Qi Kai, secretary general of COSRI, told reporters in Beijing on Jan 24 that these assessments were based on the countries’ bilateral ties with both China and the US, as well as election forecasts and their participation in Beijing’s global investment and infrastructure scheme, the Belt and Road Initiative. Click here to read… [31]

Health

WHO Europe calls for ‘urgent’ measles vaccination

The World Health Organization (WHO) has called for an “urgent” vaccine campaign to combat measles outbreaks across Europe, after registering over 42,000 infections last year. The agency’s European branch sounded alarms over the surge in cases in a press release published on Jan 23, noting that Kazakhstan has been among the hardest-hit nations.“As in other countries of the region, the virus is spreading rapidly and the outbreak is attributed largely to an accumulation of susceptible children who missed routine immunization doses during the Covid-19 pandemic; 65% of the reported measles cases in Kazakhstan have been children under 5 years of age,” the statement said, adding that the Kazakh authorities were implementing “extensive outbreak response measures,” including a major vaccination campaign. WHO Europe went on to note that more than 42,000 measles cases had been registered across 41 countries in 2023 – a massive increase over the 941 cases reported in all of 2022. In a previous notice issued in December, the health body called for “urgent action” to address the outbreak, with the WHO’s regional director for Europe, Hans Kluge, stressing that vaccines must be a top priority for any mitigation efforts. “Vaccination is the only way to protect children from this potentially dangerous disease. Urgent vaccination efforts are needed to halt transmission and prevent further spread,” he said. Click here to read… [32]

Scientists make Alzheimer’s breakthrough

Scientists have hailed a potentially ‘revolutionary’ breakthrough in the early diagnosis of Alzheimer’s, after a team of Swedish researchers found that a commercially available blood test can detect biological markers of the disease about ten to 15 years before symptoms develop. In a study of 768 people in their fifties, sixties, and seventies over an eight-year period conducted by the University of Gothenburg, it was found that the test – which detects the presence of tau proteins in blood – was 97% accurate in assessing if a subject was liable to develop the disease. The results of the study, published in the JAMA Neurology journal on Jan 22, have been hailed as a breakthrough in early screening tests for the disease well in advance of the onset of symptoms. Alzheimer’s, which causes the brain to shrink and its cells to eventually die, is the most common form of dementia, and is characterized by a decline in cognitive function, as well as behavior and social skills. The research “adds to a growing body of evidence that this particular test has huge potential to revolutionize diagnosis for people with suspected Alzheimer’s,” Sheona Scales, the director of research at Alzheimer’s Research UK, said, according to The Times on Jan 22. She added that the testing is “superior to a range of other tests currently under development,” and preferable to more invasive methods currently used by medical practitioners, such as lumbar punctures. Click here to read… [33]