Germany: There is no alternative
Also: Ukraine, Russia, the Caucasus, Ireland, and New Zealand.
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GERMANY. There is no alternative
Scholz rules out a snap election.
A spokesman for Olaf Scholz ruled out snap elections Monday, a day after the coalition government suffered a rout in European elections. The Greens party said the coalition would endure and there was "no need for a vote of confidence".
INTELLIGENCE. Scholz is not only more risk averse than Emmanuel Macron, who has called early polls, but he would face a more certain defeat. Whereas Macron is hoping France’s left will join his centrist coalition to defeat National Rally, Scholz’s Social Democrats (SPD) not only face an insurgent Alternative for Germany (AFD), but a centre-right CDU/CSU Union that also did well in the European polls, with as many votes than the AfD and SPD combined.
FOR BUSINESS. Much of the focus has been on the AfD, which gained four new seats despite recent scandals and being kicked out of the EU’s Identity and Democracy bloc. This focus will likely remain, with elections held in Saxony, Thuringia and Brandenburg in September, where AfD is polling well. Yet all three states are in Germany’s east. The bigger story is that the more populous west is moving back to the Union, which is building up its post-Merkel brand.
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UKRAINE. RUSSIA. War and peace summits
Intensification in the conference room and on the frontline.
Almost 90 states and organisations will attend a Ukraine peace summit this weekend, Switzerland said Monday. Foreign ministers from the BRICS group of countries, plus Turkey, Thailand, Vietnam, and others, met in Nizhny Novgorod.
INTELLIGENCE. The war for eastern Ukraine is being overshadowed by a battle for diplomatic support, with Kyiv and Moscow holding rival meetings, laden with symbolic intent but lacking in tangible outcomes. Ukraine is heralding peace on its terms and the country’s recovery, yet its reconstruction minister dramatically resigned Monday ahead of a separate conference in Berlin. Russia is heralding a multipolar era, but this is yet to appear beyond press releases.
FOR BUSINESS. Russia’s pride has been boosted by a recent World Bank revision that places it as the fourth-biggest economy in parity terms. Yet in dollar terms, its GDP remains just slightly more than Canada’s. Moscow will need the BRICS, chiefly China, to buy more oil and gas in rubles or yuan, for it to truly return as an economic power. So far, a pipeline to Beijing remains held up in price talks that have barely budged. It may need to hike taxes to fund its war.
THE CAUCASUS. Regional variations
Moscow destabilises friend and foe alike.
Armenia's parliament refused to hold a no confidence vote Monday as protests led by a local cleric called for the prime minister’s resignation. Georgia condemned "illegal" elections held in the Russian-occupied region of South Ossetia.
INTELLIGENCE. The archbishop of Armenia's Tavush region, on the Azeri border, has demanded Nikol Pashinian step down following the handover of four villages to Azerbaijan as part of a controversial peace deal. Pashinian has faced months of protests, but his party controls two-thirds of parliament and elections aren't due until 2026. Elections held in South Ossetia saw a pro-Putin opposition party come first in results monitored by Russian and Turkish observers.
FOR BUSINESS. Georgia has moved closer to Russia, but the Ossetian poll rankled. It is a reminder of how Moscow continues to divide and rule in the Caucasus, as it has for centuries. Armenia, once the most Russophilic of the former Soviet states is meanwhile leaning to the West, though Russian troops continue to police its borders. Pashinian’s supporters have alleged the protests are backed by the Kremlin (even if they promote pro-Armenian/anti-Azeri views).
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IRELAND. Kicked in the Sinn
Irish nationalism takes a different turn.
Opposition party Sinn Fein called to “bring on” a national election Monday despite its dismal results in European and local elections, which delivered a surprise reprieve to the government of centrist parties Fine Gael and Fianna Fail.
INTELLIGENCE. Fine Gael’s leader and the current prime minister, Simon Harris, said he was in no hurry to hold elections, but they’re now widely expected this year. It’s a dramatic turnaround since his predecessor resigned in March, after a shock no vote in a referendum on women in the constitution. But Harris may judge that like Sinn Fein, Ireland’s febrile and fragmenting politics could still hurt his chances. Polling had shown Sinn Fein at 30%. It got 12%.
FOR BUSINESS. The real winners of the weekend’s polls were a smattering of new far-right parties, who seemingly took nationalist votes from Sinn Fein – steeped in the anti-British, anti-capitalist revolution – on an anti-migrant platform in the style of Reform UK. Together, they came third in Ireland’s EU vote at around 15%. With independents, they would have come first at 29%. Ireland’s tech and financial sectors rely on migrants. This may need to change.
NEW ZEALAND. Sheep may safely graze
No great power competition to see here, bro.
Prime Minister Christopher Luxon said he would “warmly welcome” Chinese Premier Li Qiang this week. Luxon last week made his first Pacific visit to Fiji, which said it would support New Zealand’s plan to join the AUKUS security pact.
INTELLIGENCE. Luxon’s coalition was elected partly as a reaction to Jacinda Ardern’s strategic fence-sitting, but the government has continued a policy of friends to all while its tiny defence force declines. As other US partners increase their military budgets, NZ’s will fall 6.6%. Australia has meanwhile proposed poaching Kiwis for its own army, offering citizenship to those who enlist as it comes under domestic pressure to deport others who have committed crimes.
FOR BUSINESS. Welcoming Li won’t change Luxon’s poll numbers. Kiwis will consider it economically pragmatic and not inconsistent with hopes to deepen strategic ties with Australia and the US. Allies may see it differently, particularly if Donald Trump comes to the White House. Li will visit Canberra too, though Australians are more hakwish on China, a legacy of Beijing’s spat with the previous government. Moves to excise China from its minerals sector continue.