Pakistan: Fuel and fire.
Also: US, India, Ukraine, Russia, Moldova, China, Vietnam, Turkey, Syria, Iran and Britain.
PAKISTAN. Fuel and fire.
Islamabad sends in the army to quash protests.
Pakistan called in armed soldiers on Wednesday, after supporters of former prime minister Imran Khan clashed with police. Authorities said the actions of protesters were akin to “terrorism” and that Khan’s supporters “wanted civil war.”
INTELLIGENCE. The government’s moves risk backfiring with many in Pakistan’s armed forces supportive of Khan, who has been detained for eight days. Beyond the rank and file, among whom the former cricket star remains a hero, authorities will be wary of senior officers linked to Faiz Hameed, a retired Inter-Services Intelligence chief, whom Khan had wanted to head the military, before being removed as PM in 2022. Hameed’s rival, current army head Asim Munir, returned from Oman and Qatar on Wednesday, threatening protesters with reprisals. Amid foreign currency crisis, Islamabad has been calling on traditional backers, including Beijing, which Munir visited two weeks ago.
FOR BUSINESS. Beijing is yet to comment, but will be worried about any instability on its border. We are meanwhile watching Pakistan’s oil stocks, which Islamabad had hoped to refill with Russian crude bought with Chinese Yuan.
UNITED STATES. INDIA. Saffron carpet.
Biden will host Narendra Modi at a state dinner in June.
The White House said on Wednesday the president will host India's prime minister on 22 June and hold a rare state dinner. So far, Biden has only extended the privilege to France's Emmanuel Macron and South Korea's Yoon Suk-yeol.
INTELLIGENCE. Despite differences on human rights and Russia, President Biden is doubling down on India, which is now the world’s fourth-biggest economy. Following expected meetings with Modi this month in Japan for the G7 and Australia for the Quad, Biden will want to cajole a more pro-Western stance from India, though will probably end up disappointed. Since Modi’s election in 2014, India has vocally courted the West and spoken with an international accent, but has not fundamentally deviated from its traditional non-alignment. One of Modi’s political assets is his India-first persona. With knife-edge polls in local elections yesterday, he cannot afford to look weak.
FOR BUSINESS. India will remain a key destination for investors diversifying from China, but it is not the ally its Western fans portray it to be. Modi’s visit will highlight not just the potential, but the contradictions of the relationship.
UKRAINE. RUSSIA. MOLDOVA. The noise of war.
Events grind on. Not all of them matter.
Ukraine routed Russian forces in Bakhmut, late Wednesday, as mercenary group Wagner decried the "stupidity" of Kremlin commanders. Moscow meanwhile formally withdrew from the Treaty on Conventional Armed Forces in Europe.
INTELLIGENCE. The tactical defeat of a Russian brigade in eastern Ukraine appears real, but its wider implications are unknowable. What is clear however is that Yevgeny Prigozhin, head of the paramilitary Wagner Group, is tempting fate with his growing criticism of Putin’s generals. Divisions within Russia will be exploited by the West, as drone strikes and sabotage reach the homeland, but for now Putin remains above the fray (and may even be stoking some discord). He is keeping the news cycle moving in other ways, including withdrawing from suspended treaties, continuing his air assault, and raising fears in Moldova, where rallies against the pro-Europe government are intensifying.
FOR BUSINESS. The conflict remains a war of attrition and shows no sign of ending. It is unlikely to engulf Moldova, but Russia, which already controls a sliver of the country, will want to keep NATO’s Black Sea forces guessing.
CHINA. RUSSIA. VIETNAM. Taking on water.
A test for the no-limits partnership in the South China Sea.
A US Navy-funded research project said on Wednesday that nearly a dozen Chinese vessels entered a South China Sea gas field run by Russian and Vietnamese state firms. China has tested foreign firms within its claimed "nine-dash line".
INTELLIGENCE. Unlike Western governments, which have pushed back on Beijing’s intimidation in the South China Sea, Moscow will be wary of getting between its “no-limits” partner and Vietnam, a longstanding ally that has hosted Russian oil firm Zarubezhneft since the 1980s. The satellite imagery, sighted by Stanford’s Project Myoushu, will also be embarrassing for Hanoi, which has taken a careful approach to boundary disputes with Beijing, a fellow communist power but a historic enemy. At this week’s ASEAN summit, Vietnam – like fellow claimants Malaysia, the Philippines and Brunei (Indonesia pretends it isn’t one) – said little, but it is quietly building ties with the US.
FOR BUSINESS. Sino-Russian ties won’t come undone, but there is potential for more serious misalignment in Central Asia. The South China Sea remains a possible flashpoint for others, however, including the US and bears watching.
TURKEY. RUSSIA. SYRIA. IRAN. Axis of inconvenience.
With the US absent, others fill the void.
The foreign ministers of Russia, Syria, Turkey and Iran met in Moscow on Wednesday, capping off a week that saw Damascus re-join the Arab League. The talks were aimed at repairing Syria-Turkey ties, in abeyance since 2011.
INTELLIGENCE. Turkey hasn’t let elections on 14 May interrupt its diplomatic agenda, nor has Russia been completely distracted by Ukraine. Rapprochement between Syria and Turkey will leave the Assad regime with friends on all sides other than Israel, which has seen a nine-month peak in violence this week against Syrian proxies, Palestinian Islamic Jihad. The region’s realignments would not have been possible with a bigger US stick in the Middle East, but following the drawdown in Iraq, and ructions between Washington and the Gulf, Moscow and Tehran have increasingly played the role of powerbroker. And amid Western sanctions, their diplomatic forays may provide more economic options.
FOR BUSINESS. The Middle East will only become more complex without a strong US presence, and that raises risks, but for now, better relations with its neighbours will at least reduce Syria’s reliance on drugs and terrorist proxies.
BRITAIN. Getting Brexit undone.
Rishi Sunak’s pragmatism may herald a rebound in London’s fortunes.
The UK's business secretary confirmed on Wednesday the EU Retained Law Bill's sunset clause would be scrapped, meaning only EU laws that Westminster explicitly repeals will be annulled at the end of 2023, avoiding legislative chaos.
INTELLIGENCE. After the turbulent administrations of Liz Truss and Boris Johnson, Prime Minister Sunak is maintaining a moderate tone, using the distraction of the weekend’s coronation to make a move that will upset hardcore Brexiteers, many of whom backed his leadership in October. Sunak, a former banker, will have the economy front of mind, which would have suffered from a legal vacuum had the Retained Law been allowed to expunge all European regulations from UK statutes. After agreeing a Northern Ireland framework in February, Sunak’s pragmatism may win back centrist voters who might have otherwise plumped for Labour at the next election.
FOR BUSINESS. The Conservatives need all the help they can get after losing 144 local council seats last week. Steady policy will also help firms, especially in the City, which is losing market share to the continent and New York.