United States: Mess in Texas.
Also: Thailand, Japan, South Korea, Ukraine, Russia, China, Afghanistan, Pakistan and Saudi Arabia.
UNITED STATES. Mess in Texas.
Violence and uncertainty in the border state.
A vehicle ploughed into a crowd outside a migrant centre in Brownsville, Texas, on Sunday, killing at least seven. A further eight were killed at a mall near Dallas on Saturday, with the gunman, though Hispanic, wearing neo-Nazi insignia.
INTELLIGENCE. Even by US standards, the weekend’s attacks were shocking. Amid increased border crossings, a growing rift with Mexico and the expiration of Title 42 rules on 11 May – whereby migrants can be expelled on health grounds – heightened tensions in Texas, the world’s ninth-largest economy, are worrying. A low-cost growth engine, a border crisis and attendant social discord would harm the state’s investment attractiveness. That said, it would also bolster Republican re-election chances, as the narrative shifts from guns and abortion rights. Despite deploying 1,500 troops to the border, Biden will need to work to avoid migration becoming the defining issue.
FOR BUSINESS. Economic fundamentals are solid, but business should consider whether investment in Texas poses risks to assets and staff. Increasingly polarised politics will continue to have ramifications for ESG and PR.
THAILAND. Dynastic cycle.
A changing of the guard won’t cure Thailand’s ills.
Polls for Thailand’s 14 May election opened on Sunday, with 2 million Thais registered to cast early ballots. An average of opinion surveys showed the opposition Pheu Thai party in a commanding lead.
INTELLIGENCE. Now led by former prime minister Thaksin Shinawatra’s youngest daughter, Paethongtarn, the billionaire family’s political machine has a real chance of regaining power for the first time since Thailand’s 2014 coup, which removed Thaksin’s sister, Yingluck, from power. The ethnic-Chinese Shinawatra clan, however, face an equally powerful dynast in Thailand’s king, who returned from London on Sunday. Though personally unpopular, King Vajiralongkorn holds tight control of Thailand’s military and Bangkok’s conservative establishment. Rumours are rife lèse-majesté laws will be used to dissolve Pheu Thai and the progressive Move Forward Party ahead of the election.
FOR BUSINESS. Even if polls prove fair, the establishment will retain multiple levers of power. With a divided society, slowing economy and ageing demographics hard to fix, Thailand will continue to trail nearby Indonesia and Vietnam.
JAPAN. SOUTH KOREA. The hardest word.
An almost-apology may permit a lasting reset.
Japan’s prime minister said his “heart hurt” when he thought of Tokyo’s war legacy, during a visit to Seoul on Sunday. South Korea’s president said his counterpart’s comments would be “greatly helpful for future cooperation”.
INTELLIGENCE. Ties between Japan and South Korea are climbing out of a rut, with the end to trade restrictions and unofficial boycotts. Nationalists on both sides have opposed reconciliation, but more concern will be felt in Beijing and Pyongyang, which have so far exploited differences between the US allies. Stronger relations between Tokyo and Seoul will not just be good for the economy, but bolster the strategic order in East Asia. Washington, which hosted South Korean President Yoon Suk-yeol for a state visit last month, will be especially pleased. Japanese Prime Minister Fumio Kishida meanwhile saw his polling reach 50% for the first time in eight months. He may call snap elections.
FOR BUSINESS. Closer cooperation is bullish for Korean and Japanese chipmakers, who have faced stiffening competition from China and Taiwan. Semiconductor sales are down on last year, but the industry is eyeing a rebound.
UKRAINE. RUSSIA. Crying wolf.
Deceit and misinformation define the narrative.
The Wagner Group ditched threats to leave Bakhmut on Sunday, saying arms from the Kremlin had now been promised. Ukraine claimed on Saturday it downed a Russian hypersonic missile over Kyiv using the US Patriot defence system.
INTELLIGENCE. As Sun Tzu said, all warfare is based on deception. Just as Wagner’s threats to leave the battlefield were posturing, claims that Kyiv has downed a hypersonic missile should be taken with a grain of salt. Likewise, claims this weekend that Russia used phosphorus munitions over Bakhmut remain unverified. Three key developments did matter: the (re-)evacuation of civilians from nearby the Russian-controlled Zaporizhia nuclear plant; the attempted assassination of another pro-Kremlin writer; and the start of NATO Exercise Formidable Shield in the Arctic. The latter, in particular, could give Moscow excuses to test the West in other theatres.
FOR BUSINESS. Firms still operating in Russia will unlikely see an end to the war (or sanctions reprieve) for some time, just as the rebuilding of Ukraine remains a distant prospect. Munitions supplies on both sides appear low.
CHINA. AFGHANISTAN. PAKISTAN. A louder voice.
Trilateral talks position China as the region’s chief actor.
Pakistan’s foreign minister hosted his Chinese and Afghan counterparts on Sunday in talks pledging closer cooperation. China called on Pakistan to overcome its instability as a man was lynched at a political rally over blasphemy claims.
INTELLIGENCE. Kabul had to seek a UN exemption for its sanctioned minister to travel, but Islamabad emerged this weekend looking the weaker party as violence and polarisation continues to roil the nuclear-armed country. Fresh from brokering a rapprochement between Iran and Saudi Arabia, China is playing a more assertive role in its near-abroad, where a relative US absence is striking. Once a major US ally, Islamabad is increasingly beholden to Beijing, which is likewise increasing its sway over Afghanistan and the former Soviet republics of Central Asia. China faces undoubted challenges in an unstable region, but money and proximity should give it a greater chance of success.
FOR BUSINESS. Western businesses will face tougher competition from Chinese firms in neighbouring countries as host governments pursue realignment. Beijing cannot yet claim regional dominance, but the trends are in its favour.
SAUDI ARABIA. Raining in the desert.
Riyadh flexes its diplomatic muscles.
Representatives from Sudan’s warring factions met in Saudi Arabia over the weekend as Crown Prince Mohammed bin Salman hosted White House National Security Adviser Jake Sullivan for wide-ranging discussions.
INTELLIGENCE. Though Biden promised to make him a pariah in 2019, Saudi Arabia’s de facto ruler is consolidating his influence, leveraging vast oil reserves and a maturing foreign policy approach in the wake of the disastrous war in Yemen. Receiving a host of dignitaries in recent months, Saudi Arabia has become more central to the global economy since Russia’s invasion of Ukraine, refuting warnings of renewables-led irrelevance. Like the neighbouring UAE, which hosts this year’s UN climate talks, the Kingdom’s resurgence comes at a time when US regional influence is in decline. Sullivan hopes to arrest this in part via new infrastructure projects.
FOR BUSINESS. The US hopes to reinject itself through a railway linking Israel, the Gulf and India, reports claim. Details are scant, but the $3 trillion Saudi 2030 scheme and projects by China and others are meanwhile taking shape.