Armenia, Azerbaijan: Stabbed in the Karabakh.
Also: Ukraine, Russia, Syria, China, Israel, Saudi Arabia, the US and Venezuela.
THE CAUCASUS. RUSSIA. Stabbed in the Karabakh.
Putin repays an erstwhile ally.
Ethnic Armenian troops in Azerbaijan’s breakaway region of Nagorno-Karabakh surrendered on Wednesday in a Russia-brokered cease-fire. Protests continued into Thursday morning in Armenia, which claimed to be unaware of the deal.
INTELLIGENCE. A win for regional stability is a loss for Armenia’s prime minister, who seems to have been blindsided. Armenia completed its first military drills with the US on Wednesday, a move designed to show Russia it had options. But the Kremlin appears to have reciprocated by shifting its allegiance to Azerbaijan, with which it has more prospective economic links, including as a transit route to Iran. Armenians are so far blaming Yerevan, not Moscow.
FOR BUSINESS. Armenia held de facto control of Karabakh only with Russian support. Putin wants to show others – such as the Central Asian leaders who this week met Joe Biden – that they too could suffer if they get too close to the US. Azerbaijan is meanwhile losing no time in moving ahead with regional pipeline plans. BP Chair Helge Lund met President Ilham Aliyev in Baku on Wednesday, ostensibly to mark the 100th birthday of Aliyev’s late father.
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UKRAINE. RUSSIA. On the defensive.
Kyiv falters in the information war.
Volodymyr Zelensky accused the UN of being "incapable" on Wednesday, during a visit to the US. Warsaw on Wednesday said it would no longer supply Kyiv with weapons amid an escalating dispute over Ukrainian grain imports.
INTELLIGENCE. Poland's president on Tuesday described Ukraine as “a drowning person... capable of pulling you down.” The about-face of Ukraine’s staunchest EU ally bodes ill for Zelensky's visit to Washington, where a $325 million package is all he is expected to get. Support has been likewise waning in the media. The New York Times on Tuesday alleged an errant Ukrainian missile was to blame for 16 deaths at a crowded market on 6 September.
FOR BUSINESS. Ukraine has been doing better in the Black Sea, where on Tuesday the first grain ship departed since Russia pulled out of a UN-brokered export deal. Another is expected to leave soon. But Western carriers will want more evidence of security before they return. A Togo-flagged cargo vessel was evacuated on Wednesday after an explosion near the Romanian port of Sulina. Ukraine needs foreign earnings to pay for its expanding defence budget.
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SYRIA. CHINA. Damascene reversion.
Assad is back on the international stage.
Syria’s president arrived in China on Thursday on his first visit in almost 20 years. The UN welcomed the resumption of aid to the rebel-held province of Idlib on Tuesday, after Damascus agreed to open the Bab al-Hawa border crossing.
INTELLIGENCE. Bashar al-Assad’s recent travel and (relative) magnanimity on non-government held areas indicates a growing confidence. China, which has supported Syria in the UN, will want to continue its assistance, including to win reconstruction contracts and to manage thousands of Al-Qaeda-affiliated Uyghur fighters in Idlib. But Beijing will need to tread carefully. Russia, Iran, Turkey, Israel, Jordan, and Saudi Arabia all have competing interests to navigate.
FOR BUSINESS. Since brokering an accord between Saudi Arabia and Iran in March, China has enjoyed growing prestige in the Middle East, but Syria – with a GDP smaller than China’s 20th-richest man – is unlikely to make a dent in China’s overall strategy. Still, strengthening its hand in strategic locations will give China leverage in the region’s larger economies, including the Middle East’s three new members of the BRICS: Iran, Saudi Arabia and the UAE.
ISRAEL. SAUDI ARABIA. Hard bargain.
A big deal could require bigger trade-offs.
Saudi Arabia's Crown Prince told Fox News on Wednesday that "every day we get closer" to normalising relations with Israel. The New York Times reported on Tuesday that Washington was considering a mutual defence treaty with Riyadh.
INTELLIGENCE. The US and Saudi Arabia have long been allies but a treaty modelled on that with Japan, which has been suggested, would unlikely get agreement. Even with the carrot of recognition for Israel, few in Washington would be prepared to risk entanglement with Saudi Arabia’s military misadventures, or completely forgive the 2018 murder of US permanent resident Jamal Khashoggi, for which Biden once promised to make Saudi Arabia a pariah.
FOR BUSINESS. There is a lot of smoke around an impending deal, including from Benjamin Netanyahu, who met with Biden on Wednesday for the first time since his re-election. Yet beyond likely US opposition to the terms Riyadh seeks, it’s unclear if Mohammed bin Salman will risk upsetting Saudi citizens unless Israel relents on Palestine (so far it’s doing the opposite). A Saudi-Israel deal is an investor’s dream but may stay that way for some time yet.
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UNITED STATES. VENEZUELA. Borderline.
Joe Biden has few good options with Caracas.
The White House said on Wednesday it would grant temporary protection to 472,000 Venezuelan migrants. Venezuelan bond prices rose this week as investors speculated about possible sanctions relief and oil imports from the US.
INTELLIGENCE. As with Saudi Arabia, the US is used to complex deals to secure reliable oil. But here the constraints are greater, thanks to a vocal Venezuelan diaspora and faltering US border policies. To grant the additional protections, and ease the burden for Democrat-held ‘sanctuary’ cities, Washington has made a stronger human rights determination on Venezuela. But this determination could, in turn, make it more difficult to justify any moves on trade.
FOR BUSINESS. Since imposing sanctions on Russia, the US has been more open to lifting restrictions on Venezuela (like Iran). Competition with Beijing, which last week announced an “all-weather strategic partnership” with Caracas, also plays a part. But human rights are a big impediment. Caracas has warned of a “military rebellion” ahead of next month’s opposition primaries. Over 10,000 troops were sent this week to confront a prison gang.