France: C'est moi.
Also: Ukraine, Russia, China, the US, Japan, Brazil and Pakistan.
FRANCE. C’est moi.
An aloof president gives an opening to the far right.
Emmanuel Macron met ministers late Sunday amid a sixth night of violence across France. On Saturday, rioters burned the home of a suburban Paris mayor. On Friday, France's top police unions said they were at war with "hordes of vermin".
INTELLIGENCE. The shooting of an ethnic Arab teenager at a police traffic stop has split France and led to at least 500 injuries and 2,400 arrests. Arson and looting have spread throughout major cities, as well as French Guiana, Martinique, Reunion, and the French-speaking parts of Belgium and Switzerland. France likes to think of itself as colour-blind, but identity is increasingly dominating the political debate in Macron’s presidency.
FOR BUSINESS. Blaming the influence of video games and dancing at an Elton John concert, Macron seems impotent amid the chronic anger on both sides of a divided nation. The discord is a gift to the National Rally’s Marine Le Pen, who has surged past Macron in opinion polls. Luckily for Macron, elections aren’t due until 2027, but amid inflation and migration controversies, far-right parties could be the wildcard in the EU Parliament’s elections, due in June 2024.
UKRAINE. RUSSIA. At gunpoint.
Kyiv is under pressure, as is NATO.
Russian troops were advancing in four areas, Ukraine said on Sunday. Ukrainian troops meanwhile had “partial success” at Bakhmut and in the south. Joe Biden will attend next week’s NATO Summit, the White House said on Sunday.
INTELLIGENCE. On the frontlines, at least, the war is turning in Moscow’s favour. Ukraine’s counter-offensive shows few signs of a breakthrough. Kyiv’s requests for arms have become more urgent. Ukraine's top military commander on Friday complained of insufficient Western artillery and air support. The Center for Strategic and International Studies has meanwhile forecast that Russia will never run out of missiles, despite sanctions and export controls.
FOR BUSINESS. Rhetoric from the NATO Summit will be upbeat – and extend the schadenfreude of Wagner’s failed mutiny – but disunity over Sweden’s accession and an emptying arsenal will make for gloomy sidebar discussions. Diplomacy gives the best prospect for ending the war, but this will require difficult trade-offs for Kyiv and the West. Recent talks in Denmark involving non-Western countries could lead the way. Watch for how Beijing engages.
Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.
CHINA. UNITED STATES. Yellen into the void.
The US Treasury Secretary is on a peace mission.
The US Treasury Department said Janet Yellen will visit Beijing on Thursday, following Antony Blinken’s trip in June. On Saturday, CIA Director William Burns said it was foolish to “decouple” from China but sensible to “de-risk and diversify”.
INTELLIGENCE. Yellen is seen as a China dove and her department, while retaining the tools of economic coercion, is more disposed to arguments of peace through trade than the Pentagon or intelligence community. Whether Yellen can achieve a breakthrough is another matter. It is the Communist Party, not the technocrats, who call the shots in Beijing. In Washington, oratory outpaces policy, whether in the form of unintended gaffes or pre-election posturing.
FOR BUSINESS. Whether it’s called decoupling or de-risking, Sino-US relations are at a low ebb. Yet the two powers still rely on each other. China provides inflation-busting goods and a growth horizon for Wall Street. The US gives a reliable market and a currency others will accept. A trade or investment freeze would be crippling. A war over Taiwan worse. Both sides will want to exhaust diplomacy first, but there’s always the risk of accident or miscalculation.
JAPAN. Coast not clear.
Maritime chess keeps Tokyo busy.
Okinawa's governor began a visit to China on Monday. Japan's defence ministry said late Friday it had earlier spotted two Russian warships off Okinawa. Chinese media warned Monday of plans to release Fukushima water into the sea.
INTELLIGENCE. In addition to its dispute with Tokyo over the uninhabited Senkakus in the East China Sea, Beijing recently hinted it may have a claim to the larger Ryukyu Arc, of which Okinawa is the largest island (and host to 26,000 US personnel). Like its spurious arguments over Fukushima seawater, however, China merely wants to unnerve Japan and nudge the other parties with whom Tokyo has maritime disputes: North and South Korea, Russia and Taiwan.
FOR BUSINESS. Since 1945, Japan’s unresolved territorial disputes have been a brake on regional integration and a lightning rod for nationalists. Tokyo wants to ensure they don’t upset its current economic recovery or rapprochement with Seoul. Amid rumours China and Russia last week discussed cooperation in the Kuril Islands (which Tokyo claims from Moscow), Japan has loosened sanctions on oil from Russia’s Sakhalin Island (which Tokyo lost to the Soviets).
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
BRAZIL. Betting the farm.
Lula spends big to prise Bolsonaro supporters.
Brazil's electoral court on Friday barred former president Jair Bolsonaro from office until 2030, a decision he will appeal. Bolsonaro was accused of leading a movement to illegally overturn October's knife-edge election result.
INTELLIGENCE. Lula da Silva has shown that prison is no barrier to becoming President of Brazil. Similarly, Bolsonaro will be unperturbed by the court’s ruling, particularly when his movement’s 66-seat swing in October left it as the largest party in the lower house. Lula will need other ways to ensure his nemesis doesn’t retake power in 2026. Chief will be by courting conservative rural voters. Last week, his government announced $76 billion in agricultural loans.
FOR BUSINESS. Lula’s enormous offer to farmers may be good (albeit expensive) politics, but the subsidies will make the Latin American Mercosur trade bloc’s hopes for a free trade agreement with the EU even harder. It will also work against Lula's climate goals, which rely on reducing deforestation, not to mention what is left of Brazil's stated neutrality on Russia and Ukraine – part of Lula's plan involves the establishment of a tractor joint venture with Belarus.
PAKISTAN. Buying time.
A last-minute loan is a pause, not an end, to troubles.
Pakistan reached a $3 billion standby arrangement with the International Monetary Fund on Friday, hours before the expiry of an extended facility agreed in 2019. The news is a relief for Pakistan, which had been hoping for less.
INTELLIGENCE. Prime Minister Shehbaz Sharif has been spared the ignominy of begging China or freezing foreign currency accounts, but the extra $3 billion will only tide Pakistan over as the economy continues to suffer high inflation, low confidence and political uncertainty. Imran Khan, whom Sharif ousted last year, was blamed for trying to sabotage the deal but remains Pakistan’s most popular politician. He awaits trial on several criminal charges.
FOR BUSINESS. The Pakistan Stock Exchange rallied 5.3% on Monday's open. Khan paused his daily commentary to instead criticise the country’s cricket board. But Pakistan is not out of the woods. The rupee remains weak. Inflation may only be worsened by an IMF-mandated hike in power prices. Floods have been predicted to return in this year’s monsoon. A rescue from Beijing may still be necessary. Last week, Alibaba founder Jack Ma was spotted in Lahore.
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