Europe: Trial and terror
Also: Israel, the US, China, Indonesia, and the Pacific.
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EUROPE. Trial and terror
Governments look again to an amorphous threat.
Italy followed France in raising its security alert level Monday. Paris said an extra 4,000 soldiers would be placed on standby. Austrian media said two Tajiks in Ukraine had been accused of plotting an attack on a Vienna cathedral.
INTELLIGENCE. Following Friday’s terrorist attack in Moscow, European capitals have scrambled to re-evaluate their threat levels. Not all have led to a kneejerk response. Berlin said risks remained acute but fundamentally hadn't changed. UK Chancellor Jeremy Hunt said he remained “absolutely” concerned but pushed the question of changing Britain’s threat levels to an independent process. Emmanuel Macron warned against “cynically exploiting” the crisis.
FOR BUSINESS. Terrorism is an intrinsically political act, and its politicisation is hard to avoid. States like the UK have delegated threat determination to apolitical bodies, but others make their assessments from within government. Still, it’s hard to ignore the warnings. And just as governments can’t take the risk of downplaying threats, particularly ahead of major events (Easter in Rome, the Olympics in Paris), firms and insurers can’t afford to ignore the risks either.
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ISRAEL. UNITED STATES. Symbol, not signal
All politics is local.
Benjamin Netanyahu cancelled a delegation to the US after Washington abstained from a UN Security Council vote. The White House said it was "perplexed" by the reaction. Donald Trump said Israel needed to "finish" its offensive in Gaza.
INTELLIGENCE. Ahead of a decision on the conscription of Jewish seminary students, which threatens to split Israel’s coalition, Netanyahu is appealing to his base on Washington’s alleged bad faith. Joe Biden is likewise appealing to his in taking a harder line on Israel, though military support continues. Trump’s comments can be read as both an endorsement of Israel’s approach, as well as a warning. Hostage talks with Hamas are meanwhile going nowhere.
FOR BUSINESS. The crisis is lose-lose for all sides. Even Iran, which many see as a beneficiary of the chaos, has had its economic reopening stalled and its rapprochement with Saudi Arabia complicated. The disruptive role of locally driven politics in international deal-making is not new, but seldom is it so intractable. Israel’s economy continues to suffer as a result, though the tech-heavy Tel Aviv 35 stock index continues to approach levels last seen in 2022.
CHINA. UNITED STATES. Chipping away
Biden’s truce with Beijing starts to crumble.
US tech stocks fell Monday following reports China had begun a ban on Intel and AMD chips from government equipment. London and Washington accused Beijing of a "malicious" cyber campaign on voters, firms, and officials.
INTELLIGENCE. Washington and Beijing reached an equilibrium of sorts earlier this year when long-delayed talks on security, narcotics and trade resumed amid a sense neither economy could handle additional stress. Markets in both countries have since risen, and many in China are eyeing a recovery. The tensions (which never fully went away) have resumed. For the US, China's technological threat tops concerns. For China, it's US interference in its near abroad.
FOR BUSINESS. The US is surrounded by oceans and its policymakers barely consider the threat Beijing feels from US personnel in Taiwan and the South China Sea. China’s economy is built on state control (it is, after all, Marxist) and its policymakers barely consider the threat Washington feels from Chinese electric vehicles, semiconductors, and clean tech. Neither side will ultimately change tack, but both will want a return to stability, at least until November.
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CHINA. THE PACIFIC. Cop in the ocean
A furore over policing is just part of the story.
Australian debated China's role in the Pacific Monday after a documentary showed Chinese police exfiltrating 77 people from Fiji. Xi Jinping met with Nauru's president in the island's first summit with Beijing since official ties were restored.
INTELLIGENCE. The video of uniformed Chinese officers (from 2017) spooked many in Canberra, particularly as Fiji last week renewed its policing agreement with Beijing and reports surfaced of similar operations elsewhere, including former Taiwan ally Kiribati. Questions are now being raised over Nauru and Vanuatu, also former Taiwan allies. The US this month said it would “imminently” open an embassy in Vanuatu and was working on another in Kiribati.
FOR BUSINESS. Police cooperation is one thing, military cooperation is another. Solomon Islands came under Western pressure in 2022 amid reports it would host a Chinese base. Ahead of Solomons’ elections next month, New Zealand has now said it will send troops of its own. Australia last year signed a defence treaty with Tuvalu. Tuvalu's government subsequently changed. It remains a Taiwan ally but is considering ditching its deal with Canberra.
INDONESIA. THE PACIFIC. Pressure islands
Jakarta looks beyond its archipelago.
Jakarta said it had arrested 13 soldiers Monday after a video surfaced of them torturing a man from Papua, an ethnically Melanesian region in the east. Indonesia and Fiji last week signed a range of MoUs on education and industry support.
INTELLIGENCE. Sprawled across 17,000 islands, Indonesian politics tends, unsurprisingly, to be insular. Yet rivalry with China and the election of US-educated ex-general Prabowo Subianto promises a more outgoing approach. To bolster its sovereignty, Jakarta is reaching out to Melanesian states that once supported Papuan separatism. And to bolster its leadership in Southeast Asia, it is also expanding its influence in the Pacific, where China likewise looms.
FOR BUSINESS.The Pacific is geopolitically crowded but Jakarta will likely support rather than detract from the efforts of Washington and its allies. That said, Indonesia wants support of its own. It has been studiously ignored by the West (and Western firms) for decades. Its globally leading nickel industry is now dominated by Chinese investors. Those same investors are now eyeing nickel deposits across the Pacific, particularly in the Melanesian archipelago.