China, Taiwan: Lai in wait
Also: Myanmar, the Indian Ocean, Argentina, Israel, and Palestine.
In addition to our daily risk monitoring brief, the team behind Geopolitical Dispatch also provides advice, risk audits, scenario planning , executive masterclasses and board briefings among other services. Click here to get in touch.
CHINA. TAIWAN. Lai in wait
It’s another election that matters to Beijing.
The Democratic Progressive Party won a third presidential term, despite losing seats in the legislature. China said it was "gravely wrong" for the US to congratulate Taiwan. Joe Biden said the US did not support Taiwanese independence.
INTELLIGENCE. The DPP’s William Lai Ching-te was not China’s preferred candidate, but he is unlikely to stir trouble, particularly with an opposition-controlled legislature. Beijing’s muted reaction suggests its carrot-and-stick approach to (eventual) reunification will continue unless Washington provokes a stronger response. China isn’t ready or willing to mount an invasion, let alone risk war with the US, so will worry about becoming a political football in the US election.
FOR BUSINESS. Cross-strait ties will remain in focus for investors under a third DPP term but more prosaic issues – like living costs, which featured strongly in the election – will determine Taiwan’s economy and, in turn, its tech sector. Tit-for-tat sanctions and export bans between Washington and Beijing remain key risks. Taipei can ill-afford further bifurcation in its supply chains, nor can Silicon Valley should AI-fuelled valuations begin to falter in 2024.
Geopolitical Strategy is the advisory firm behind Geopolitical Dispatch. Our partners are former diplomats with vast experience in international affairs, risk management, and public affairs. We help businesses and investors to understand geopolitical developments and their impacts with clarity and concision.
CHINA. MYANMAR. Node to Mandalay
Beijing seeks to protect a strategic trade corridor.
Myanmar's military junta and the key rebel alliance agreed to a ceasefire on Friday following China-brokered talks. Ethnic militants attacked the port of Kyaukphyu last week, days after a concession deal was signed with Beijing.
INTELLIGENCE. With Myanmar's civil war spilling over China's borders and impacting its nationals, Beijing wants to bring matters to a close. But even if a ceasefire proves brittle, China's main interest is ensuring key Indian Ocean supply lines remain open. At the nexus of South and Southeast Asia, Myanmar has long been coveted territory. China additionally sees it as a route around US-controlled choke-points in the Strait of Malacca and the East China Sea.
FOR BUSINESS. China runs a 1,000km oil, gas and rail link from Kyaukphyu to Kunming. Plans for a potential deep-water port, as part of the Belt and Road Initiative, have been held up by red tape (and likely Indian objections), but with the right incentives, China can probably continue the project, irrespective of who emerges victor. Despite long support for the military, Beijing has proven willing to work with most participants in Myanmar’s kaleidoscopic conflict.
INDIAN OCEAN. Hot water
Rivalries stir beyond the Red Sea.
Azali Assoumani was expected to win a fourth term in Comoros's elections on Sunday. Two Navy SEALs went missing on Thursday off the Somali coast. The Maldives on Sunday gave India a 15 March deadline to withdraw its personnel.
INTELLIGENCE. Strategic interest in the Indian Ocean is nothing new, but events in the Red Sea have given it a renewed salience, including in the Mozambique Channel where much of the world’s freight has been redirected. Close to Moscow and Beijing, Comoros has been seen as a potential location for a Chinese naval base, as has the Maldives. Sri Lanka was once eyed for a PLA presence, but more recently it has declared a freeze on visiting Chinese spy ships.
FOR BUSINESS. Some 50% of shipping and 70% of seaborne oil transits the Indian Ocean. Historically it was controlled by the British and, more recently, the US, from its base on Diego Garcia. Today, it’s a focus for India – with stations in Oman, Seychelles, and Mauritius – and China – with a port in Djibouti but designs elsewhere. With several territories, France is also in the mix. Modi has invited Macron to be chief guest at this month’s Republic Day parade.
Emailed each weekday at 5am Eastern (9am GMT), Geopolitical Dispatch goes beyond the news to outline the implications. With the brevity of a media digest, but the depth of an intelligence assessment, Geopolitical Dispatch gives you the strategic framing and situational awareness to stay ahead in a changing world.
ARGENTINA. Inflated expectations
As prices rise, hopes fall.
Argentina's annual inflation rate hit 211.4% on Thursday, overtaking Venezuela. The IMF agreed to release $4.7 billion on Wednesday as part of a restructuring plan. Last month, China suspended a $6.5 billion currency swap deal.
INTELLIGENCE. Since November’s shock election of libertarian Javier Milei, investors have anticipated an economic rebound and pro-Western pivot. Yet with Peronists still controlling the legislature and a deep US scepticism pervading society, the hopes may not last. The courts have blocked Milei’s labour reforms. The Pope has indicated support for protesters. The foreign minister met with China's ambassador on Friday, recommitting to the Belt and Road.
FOR BUSINESS. Milei can only move at the speed his system allows and he would not be the first president to fail at fixing Argentina’s many structural problems. Additional IMF support can only go so far. The fund has made 21 arrangements since 1958. China may prove a more flexible creditor, especially as it has several non-economic interests – like an alleged military listening station in Patagonia and a port near the Strait of Magellan – to consider.
ISRAEL. PALESTINE. 100 days of hell
A grim milestone in a war with no winners.
Hamas released a video of three hostages on Sunday, in a warning to Israel on the 100th day of the Gaza war. Israel rejected South Africa's charges of genocide on Friday, in a statement to the International Court of Justice in the Hague.
INTELLIGENCE. Israel has neutralised Hamas in Gaza’s north and will, in time, do so in the south. It will not be swayed by international condemnation, or the legally doubtful case before the ICJ. Yet US patience is running out, particularly as other regional actors, including the Houthis in Yemen, use Gaza as a shield for their own destabilising activities. And as the US election season looms, the unpopularity of Israel’s war to Joe Biden’s left is an unwanted distraction.
FOR BUSINESS. Israel’s economy is also suffering from the ongoing deployment of reservists and the political uncertainty of Benjamin Netanyahu’s beleaguered coalition, which was dealt two more blows this month. On 1 January, Israel’s supreme court ruled against a measure to limit judicial powers. Two days later, it delayed a move to shield Netanyahu from forced recusal. Netanyahu’s approval rating is at -29%. Budget talks on Sunday hit an impasse.