Eastern Europe: Three-sea circus.
Also: the EU, Britain, the Philippines, Myanmar, China and Latin America.
EASTERN EUROPE. Three-sea circus.
An old idea runs into old problems.
Greece joined the Three Sea Initiative, a dialogue of eastern EU states, on Wednesday, while Ukraine and Moldova became associate members. Ukraine on Thursday said it had started exporting grain via Croatian seaports.
INTELLIGENCE. An alliance of states from the Baltic to the Adriatic and Black Seas has long been a dream of Eastern European strategists. Modelled on the ‘Intermarium’ concept of the 1920s – a proposal to unite the lands of the old Polish-Lithuanian Commonwealth – it has gained new salience since Russia's invasion of Ukraine. Yet the Initiative’s 14 members are hardly more cohesive than the EU as a whole. Many also see it as a ploy for Polish expansionism.
FOR BUSINESS. The EU’s eastern members, by virtue of their cost competitiveness, are the region’s fastest growing, but this does not make the Three Seas a coherent economic unit. Trans-Balkan infrastructure could be spurred by Greece’s membership but will be built with EU (or Chinese) money. Bulk Ukrainian transport via clogged Balkan roads and railways will in any case be costly, limited, and continue to face opposition from the EU’s politically active farmers.
EUROPEAN UNION. My brother’s gatekeeper.
The Digital Markets Act delivers an ultimatum.
Microsoft on Thursday said it would assume its customers’ risks for copyright infringement when using its AI systems. The company was one of six named by the EU as “gatekeepers” on Wednesday as part of a new regulatory push.
INTELLIGENCE. The Digital Markets Act was enacted in May, after being signed into law last year. This week’s designation of the six "gatekeepers" was no surprise but generated fresh headlines about Brussels' overreach. The news comes alongside reports that Zoom has met with US and EU regulators on anti-competitive behaviour from Microsoft. It also coincides with a decision by the EU's long-time antitrust chief Margrethe Vestager to step down.
FOR BUSINESS. Microsoft, Alphabet, Amazon, Apple, ByteDance and Meta have been given six months to liberalise third-party access to their platforms or face large penalties. In response to this and other recent directives, the tech titans are defiant in some areas and acquiescent in others. Google is introducing new disclosures on political advertising. Microsoft is on the front foot regarding cyber threats. Meta is withdrawing parts of its news business.
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BRITAIN. Salad year.
A year on from Elizabeth and Liz.
The results of the UK's latest offshore wind auction, to be announced later on Friday, are expected to show no bids, media said. An ex-Conservative backbencher resigned on Thursday, setting the scene for another difficult by-election.
INTELLIGENCE. Twelve months after the Queen’s death and the short-lived Truss administration, the UK remains in a pattern of low growth, angry voters, political scandal, and stop-start policy. Elections aren't due till 2025, but the Tories, in power since 2010, are dying of a thousand cuts. Still, Labour can't relax. Problems at its councils like Birmingham, now effectively bankrupt, are keeping voters wary. Keir Starmer reshuffled his front bench on Monday.
FOR BUSINESS. A lack of bidders is a result of Britain’s electricity price cap (at which power from the project can be sold to consumers). With wages and material costs spiralling, the projects don’t add up. The UK’s decarbonisation agenda looks particularly wobbly when the likes of Vattenfall and SSE can’t work with the conditions on offer. Green policies are also becoming politically dicey, as shown by the divisive expansion of London’s Ultra Low Emission Zone.
THE PHILIPPINES. Making a Marcos.
Manila pursues a determined course.
Philippine President Ferdinand Marcos Jr signed a free trade agreement with his South Korean counterpart on Thursday. The same day, Vietnam said it would soon sign a pact with the Philippines to ensure secure trade in rice.
INTELLIGENCE. After decades of policy chaos, Marcos is instilling a greater sense of direction, albeit not in the autocratic manner of his late father, who ran the country between 1965 and 1986. Amid closer defence ties with the West, Manila is pursuing closer economic links with key US partners. Australia's prime minister visited Manila to upgrade ties on Friday, fresh from announcing a new Southeast Asia trade strategy in Jakarta earlier in the week.
FOR BUSINESS. In per capita terms, the Philippines is poorer than other members of the Association of Southeast Asian Nations bar Cambodia, Laos, and Myanmar. Once ranked Asia's second-richest country after Japan, corruption and bad governance have left it with bad infrastructure and wide inequality. Still, closer US ties and an English-speaking population could help continue its recent fast growth and its graduation to more sophisticated industries.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
MYANMAR. Rangoon squad.
A dictatorship’s troubles mount.
Myanmar was “worsening”, the UN Secretary-General said on Thursday. On Friday, local media reported the deaths of 50 junta soldiers in a range of ethnic clashes and the worsening health of jailed opposition leader Aung San Suu Kyi.
INTELLIGENCE. In contrast to most of its peers, Myanmar is going backward politically and economically. While regional efforts to broker a deal between the junta and the opposition have failed, the finger-pointing continues, and Myanmar has increasingly been shut out of Southeast Asian markets. Should Aung San Suu Kyi die, the criticism will only grow, as will community anger, both from the Burman majority and minority groups, many of them armed.
FOR BUSINESS. Violence, corruption and poverty were endemic under Aung San Suu Kyi’s brief democratic rule, but things have gotten worse under the military, which retook control in 2021. India, Russia and China have kept it afloat, but patience will wear thin unless the junta can stabilise commodity-producing areas, on which its income depends. Chinese rare earth prices hit 20-month highs on Thursday after mines in Myanmar's Kachin State closed on Monday.
CHINA. LATIN AMERICA. American dream.
Beijing offers a different pursuit of happiness.
Venezuela's President will visit Beijing this weekend, China said on Friday. Nicaragua and China signed a free trade agreement last week, rewarding the Central American country's switch in recognition from Taiwan in 2021.
INTELLIGENCE. Despite speculation that it may get a reprieve from US sanctions ahead of next month’s elections, thanks to tightening oil markets, Venezuela is looking to Beijing for no-strings (or different strings) assistance. President Nicolas Maduro is expected to sign new energy deals and loan extensions. Nicaragua currently sends most of its coffee, beef and sugar to the US. An FTA with China, however, won't improve a persistent trade deficit.
FOR BUSINESS. The deals aren’t economically big for China (though more Venezuelan crude could help), but they raise the stakes for Taiwan’s remaining diplomatic allies in the region: Belize, Guatemala, Haiti, Paraguay, and a handful of Caribbean islands. Guatemala, fresh from electing a new president, could be the first to switch. He has already said he wants to expand economic ties. A 2019 FTA with Taiwan has only led to an extra $60 million in trade.
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