Ethiopia, Somalia, Eritrea: Horn of a trilemma
Also: the US, Germany, India, China, Pakistan, and Afghanistan.
ETHIOPIA. SOMALIA. ERITREA. Horn of a trilemma
A controversial port deal quickly escalates.
Somalia's president visited Eritrea on Monday following Ethiopia’s announcement last week that it would lease ports in the self-declared Republic of Somaliland. Ethiopia on Monday said it had held military talks with the separatist region..
INTELLIGENCE. Since losing Eritrea and its coast in 1991, Ethiopia has been the world’s most populous landlocked country. Recently, Prime Minister Abiy Ahmed has warned of remedying this – a threat thought aimed at Eritrea – but his Somaliland deal shocked a region already facing several Red Sea threats. The latest moves hint at diplomatic recognition, which could lead to war. Eritrea once armed Somalia’s Al-Shabaab militia, which also opposes Ethiopia.
FOR BUSINESS. Somaliland claims recognition is part of the deal, but Ethiopia has not. Either way, it boosts Somaliland's ambitions and could be followed by further involvement from the UAE, another de facto backer (and meddler in Yemen and Sudan), plus Kenya, which allegedly supports another would-be ex-Somali state in Jubaland. Multiple wars have been fought over the Horn of Africa’s borders. A UN arms embargo on Somalia ended last month.
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UNITED STATES. Capital punishment
An election year begins on a divisive note.
House Republicans on Monday threatened to block a $1.6 trillion spending deal clinched by Congressional leaders, which would avert a 19 January shutdown. Gallup on Friday said just 28% of voters were satisfied with US democracy.
INTELLIGENCE. The deal, of which $886 billion has already been pledged to the Pentagon, sees a rare cut in non-defence discretionary spending but has failed to satisfy members of the Freedom Caucus, who smell blood ahead of next week's Iowa Republican caucuses. The White House is meanwhile on the back foot after the revelation Defense Secretary Lloyd Austin was in ICU last week without Biden’s (or the military’s) awareness. His deputy was on vacation.
FOR BUSINESS. It increasingly appears as if nobody's in charge in Washington. Many consider gridlock a feature, not a bug, of US democracy, but eventually, political chaos will impact markets and the economy. In an election year, this will only propel Trump, who is becoming favourite for November's poll, barring an unlikely victory by Nikki Hayley in Iowa, an unlikely toppling of Biden by concerned Democrats, or an unlikely legal upset (many have tried, none successfully).
GERMANY. Sowing discord
Farmer protests are the least of Scholz’s concerns.
Berlin warned against "coup fantasies" on Monday as farmers blocked roads across Germany in response to agricultural subsidy cuts. Almost two-thirds of Germans want Chancellor Olaf Scholz to resign, a poll in Bild reported on Monday.
INTELLIGENCE. The challenges inherited and aggravated by Scholz’s fractious coalition have seen a shift to the far-right. The farmer protests are the latest show of this, but a bigger risk to Scholz, who doesn’t face elections until October 2025, could be Monday’s formation of the “left-wing conservative” Alliance Sahra Wagenknecht, which, unlike the far-right Alternative for Germany party (AfD), could potentially lead to defections from Scholz’s Social Democrats.
FOR BUSINESS. Ex-communist Wagenkecht has fused anti-migration views with left-wing economics. Without the AfD’s alleged neo-Nazi links, she could be the populist voters crave, particularly if others in the Bundestag join her party. Such a move would normally panic German industry, but with the centre failing to keep costs low, or budgets in check, the fringe seems increasingly acceptable (even as November’s trade data provides a temporary reprieve).
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INDIA. CHINA. Neighbourhood watch
Delhi is challenged for regional hegemony.
Maldives' president arrived in Beijing on Monday as India summoned the country's envoy over a diplomatic row. Bhutan held a second round of elections on Tuesday amid ongoing talks with China to resolve its disputed northern border.
INTELLIGENCE. Delhi has long dominated its near-abroad, but China has steadily made inroads since cementing a quasi-alliance with Pakistan in 1963. Alleged attempts to establish a base in Sri Lanka fell apart when Colombo’s government collapsed under the weight of dud loans in 2022, but Delhi fears Beijing is now eyeing a presence in Maldives, which since elections last year has kicked out Indian troops and could now face an Indian tourism embargo.
FOR BUSINESS. Maldives’ government came to power on economic promises and anti-Indian jingoism. Last week, an official responded to Narendra Modi’s visit to the Indian Lakshadweep atolls by calling him a “clown”. Indian tour sites have since suspended bookings to Maldives, curtailing the country’s main source of visitors (alongside Russia). Bhutan, also reliant on India but being courted by China, will be watching, as will Nepal and post-election Bangladesh.
PAKISTAN. AFGHANISTAN. My enemy’s enemy
A shared security crisis may diffuse tensions.
Afghanistan's acting prime minister told a Pakistani delegation on Monday that Kabul did not mean its neighbour harm. The Pakistan Taliban took responsibility for six police deaths on Monday. Islamic State killed five in Kabul on Saturday.
INTELLIGENCE. Islamabad's relationship with Kabul has taken a dive since the Taliban seized control in 2021. But, amid increased attacks from terrorists that Islamabad claims use Afghan territory, a truce is now being sought. Pakistan’s military establishment needs stability as it prepares to anoint ex-prime minister Nawaz Sharif (a political ban has been lifted; new charges have been made against Imran Khan; parliament is moving to again delay elections).
FOR BUSINESS. Pakistan’s IMF-assisted recovery also needs stability, both in terms of politics and security, though to achieve the latter Islamabad may need to end its populist expulsion of Afghan refugees. And even if Taliban affiliates pause their campaign, there are many other terror groups that wish to harm Pakistan and foreign interests. Afghanistan itself is under fresh attack from Islamic State, whose local arm has also committed atrocities in Iran.