China, the US: Narrowing straits.
Also: Italy, Israel, Palestine, Iran, Ukraine, Russia and Guatemala.
CHINA. UNITED STATES. Narrowing straits.
Jake Sullivan and Wang Yi meet in Malta.
Biden's national security adviser met China's top diplomat in Malta over the weekend for “candid, substantive and constructive discussions”. Taiwan said on Monday it had spotted 103 Chinese military aircraft within the last 24 hours.
INTELLIGENCE. The site of summits between Churchill and Roosevelt, Gorbachev and Bush, Malta was a symbolic venue. And the challenges China and the US face are no less historic, particularly as the risks of a Taiwan Strait accident increase and Beijing’s politics get murkier. China’s defence minister is allegedly under arrest. Under US sanctions, he had refused to meet his US counterpart. A silver lining may be that his successor will be more willing.
FOR BUSINESS. The Sullivan-Wang meeting presages a summit between Biden and Xi. In addition to defence chiefs, the two leaders must talk, particularly as the scope for miscalculation increases. Businesses on both sides will be relieved by any such dialogue. As US inflation edges up, a debt ceiling nears, and China continues its halting recovery, a stable relationship between the world’s most important economies is essential (even if only temporarily stable).
ITALY. Unforgiving seas.
A migrant crisis tests Rome’s populists.
Italy’s prime minister and the EU commissioner called on Sunday for measures to combat rising irregular migration from Africa. “Business is turning against the government,” a former Italian minister told the Financial Times on Monday.
INTELLIGENCE. Speaking from Lampedusa, an Italian island equidistant from North Africa and Malta, and which saw 7,000 arrivals last week (more than its population), Italy's Giorgia Meloni and the EU’s Ursula von der Leyen spoke of European solutions, but of a different nature. Elected on a populist platform, Meloni is finding it difficult to apply nationalist policies within the confines of EU regulations. It is a warning to other far-right parties seeking government.
FOR BUSINESS. Though ostensibly pro-business, Meloni is also finding it difficult to square her free-market instincts with her coalition’s anti-establishment base. Attempts to tax the banks and control airline prices are a case in point. Tackling Italy’s high debt burden and lacklustre growth will be even harder. In her favour are approval ratings among the highest in the EU, but unless she can tackle irregular crossings, public support will fall alongside that of business.
Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.
ISRAEL. PALESTINE. Holy land, unholy mess.
Coalition politics disrupts diplomatic strategy.
Israeli settlers attacked Palestinian worshipers at the Al-Aqsa Mosque on Sunday, the last day of Rosh Hashanah. Riyadh has suspended normalisation talks with Israel due to Palestinian concerns, Saudi media reported on Sunday.
INTELLIGENCE. As Benjamin Netanyahu prepares to meet Joe Biden and address the UN, violence in Gaza and the West Bank is casting a long shadow. Deteriorating Israeli-Arab relations are a consequence of Netanyahu’s fractious far-right coalition, which has also pushed through controversial changes to Israel’s Basic Law, now under judicial review. Saudi normalisation, alongside regional infrastructure, has been a pillar of US policy, but is now in jeopardy.
FOR BUSINESS. Netanyahu is not just risking peace or US policy, but Israel’s economy. While 3% annualised growth for the second quarter belied gloomy predictions from investors and the tech sector, which mostly opposes the coalition, cost of living pressure and a rebounding 4.1% inflation ratecould cloud any silver lining from rising gas exports or population growth. Rating agency Moody’s is expected to issue a negative credit outlook next month.
IRAN. Fissile.
Inconsistent policies reflect regime splits.
Five detained Americans will be released today, media said Monday. Tehran increased its police presence on Saturday on the anniversary of mass protests. The UN's nuclear agency on Saturday slammed Iran's blocking of inspectors.
INTELLIGENCE. As Supreme Leader Ali Khamenei ages, moderates and hardliners are battling for who will control the Islamic Republic. Many on both sides also see a two-steps-forward-one-step-back approach to the West as useful to increasing Iran’s leverage. Arguably it has worked. The US hostages are being freed in exchange for $6 billion in seized assets. Recent brinkmanship with the International Atomic Energy Agency comes from the same playbook.
FOR BUSINESS. Iran wants to be free of sanctions, but many in the regime have grown rich from sanctions busting. Conservative clerics have also hidden behind the US ‘Great Satan’ to deflect criticism, particularly in the wake of riots following last year’s killing of a young woman by Iran's morality police. As relations with the West have worsened, Iran has grown closer to Russia and China, but historically it likes to hedge. Don’t rule out another pivot soon.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
UKRAINE. RUSSIA. Battle of the Beltway.
Zelensky faces a new threat in Washington.
Volodymyr Zelensky is set to visit the US this week, media reported on Thursday, in a bid to secure more aid. Kyiv announced the recapture of a village near Bakhmut on Sunday, heralding it as a breakthrough for its counter-offensive..
INTELLIGENCE. Zelensky wants to show Americans he’s still worth backing, but not everyone agrees. Amid a worsening debate over US debt levels and a looming government shutdown, Zelensky’s timing is inopportune, but he needs to boost morale at home before colder weather sets in and fighting gets even harder. Adding to scepticism in Congress will be Donald Trump’s comments on Sunday that Ukraine could have struck a deal with Russia by now.
FOR BUSINESS. Fuelling scepticism by some in the Republican Party's Freedom Caucus are allegations Joe Biden has benefited from his support of Zelensky thanks to his son’s dealings with a Ukrainian firm. The Caucus, which has 20% of House Republican votes, has been the least supportive of Ukraine, most supportive of Trump, and most vocal on debt. Zelensky is trying to appeal to them directly, telling The Economist that Trump would “never” support Putin.
GUATEMALA. Pact against him.
Arévalo takes on the Pacto de Corruptos.
Guatemala's President-elect Bernardo Arévalo said on Friday he would call on supporters to protest attempts to usurp his election. Arévalo suspended transition arrangements on Tuesday after prosecutors raided election authorities.
INTELLIGENCE. Guatemala's political elite, dubbed the ‘Pact of the Corrupt’, has deposed presidents before, as Arévalo knows first-hand. His father, Juan José Arévalo Bermejo, faced 25 coup attempts in his six-year term. The Pacto’s techniques are more legalistic these days, but examples like Thailand’s recent ousting of election victor Pita Limjaroenrat, show how it can be done. Prosecutors have alleged irregularities with the registration of Arévalo’s party.
FOR BUSINESS. If Arévalo isn’t ousted peacefully there’s a risk of violence. Despite just 17 million people, Guatemala is Latin America’s top destination for US semiautomatics. If, on the other hand, Arévalo survives, the economic upside of a popular administration could be great. Not everything will be to the US’s liking – Arévalo may switch diplomatic recognition from Taipei to Beijing – but a stable environment would help textiles investments and ease refugee flows.
Emailed each weekday at 5am Eastern (9am GMT), Daily Assessment gives you the strategic framing and situational awareness to stay ahead in a changing world.