India, the US: Lotus position.
Also: China, Cuba, Ukraine, Russia, France, Britain and Pakistan.
INDIA. UNITED STATES. Lotus position.
Narendra Modi is not just flexible at yoga.
India's prime minister arrived in New York on Tuesday, ahead of a visit to the US involving a day of yoga, two dinners with President Biden and a joint address to Congress. The White House on Tuesday said the visit was “not about China.”
INTELLIGENCE. Modi will relish the adulation he now customarily receives, but scepticism is rising among US diplomats, who have seen less a pivot to the West than a disconcerting King Pigeon Pose, where Delhi is doubling down on Moscow while playing footsie with Washington. There are worries too that should Delhi make amends with Beijing it will lose a key reason for its quasi-alignment with the US, complicating allied plans across the Indo-Pacific.
FOR BUSINESS. India has good reasons for a tighter embrace with the US, and likewise, US firms have good reasons to do more with India. But India also has good reasons to bury its animosity with China, which others in the BRICS would welcome. Beyond isolating China's ally Pakistan, and reducing risk at their Himalayan border, Indian firms could find new footholds in China as Western ones depart – a strategy they’ve used to great effect in Russia.
CHINA. UNITED STATES. Awkward position.
Joe Biden is embarrassed over family and foe.
President Biden referred to his Chinese counterpart as a “dictator”, during a fundraising speech on Tuesday night. Biden's son, Hunter, reached a plea deal with prosecutors on Tuesday over unpaid taxes and illegally possessing a gun.
INTELLIGENCE. At the time of writing, Beijing had yet to respond to the comments, which came a day after US Secretary of State Antony Blinken met with Xi. China will be under no illusions as to what Biden really thinks, but the gaffe will nonetheless provide an excuse to ratchet tensions, should it deem it necessary. Similarly, the cloud over Biden’s son will be fodder for those wanting to paint the US as just another country as corrupt and inept as the rest.
FOR BUSINESS. The timing is unfortunate for both Biden, who was enjoying the distraction of Donald Trump’s legal woes, and for US firms wanting a reprieve from Sino-American tensions. The Hunter Biden saga is also unfortunate insofar as it further tarnishes Washington’s reputation and policy of wielding sanctions when it comes to third-country failings. While the trials of Hunter and Trump prove the strength of US justice, that may not be how the world sees it.
CHINA. CUBA. Havana go.
Beijing wants to send Washington a message.
China is in the final stages of negotiating a joint military training facility in Cuba, the Wall Street Journal reported on Tuesday. The White House said it was “no secret or surprise” that Beijing was trying to increase its influence and reach.
INTELLIGENCE. Despite Cuba’s location – 90 nautical miles off Florida and controlling access to the Gulf of Mexico and Caribbean (and thus Panama and the Mississippi) – there’s little a training base can do other than annoy the US. That is likely the point. The potential facility’s unacceptability to Washington is in proportion to the annoyance with which Beijing views the US Navy at Okinawa – 400nmi off Shanghai and controlling access to the East China Sea.
FOR BUSINESS. Like the Cuban Missile Crisis, a Soviet tactic to remove US missiles near its border, the development is likely more about Washington’s posture in Asia than Beijing’s in the Caribbean. Despite misgivings about China’s inroads into Central America (Sunday’s election in Guatemala – a remaining Taiwan ally – bears watching), it is also more about Okinawa, which this month was publicly mentioned by Xi Jinping for the first time since taking office.
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UKRAINE. RUSSIA. War of words.
Rhetoric escalates as stalemate ensues.
Russia said on Tuesday that any strikes on Crimea by US or British missiles would mean the US and Britain “would be fully dragged into the conflict”. On Monday, Joe Biden said the threat of Russia using tactical nuclear bombs was “real”.
INTELLIGENCE. Washington and London are already dragged into the conflict, but Moscow wants to probe weakness in Ukraine’s partnerships as its troops remain entrenched on a frontline little changed since Ukraine’s counter-offensive began. Both sides are trying hard to move the dial. Russia on Tuesday passed laws to clear criminal records in exchange for military service. Ukraine is launching increasingly creative strikes on Russian ammunition depots.
FOR BUSINESS. Both sides are claiming victory but this will remain a long war of attrition. Keeping up supplies is key. Ukraine is exposed to Western funding cycles – the EU's proposed €50 billion Ukraine budget package, announced on Tuesday, was received sceptically by fiscal hawks. Russia is exposed to a sclerotic industrial base and a rogue’s list of foreign suppliers. In the meantime, predicting the twists of battle remains a fool’s errand.
FRANCE. BRITAIN. Blasts from the past.
Two conferences and a search for meaning.
Emmanuel Macron met counterparts from Italy and South Korea on Tuesday, ahead of a 50-leader Paris summit on Thursday to discuss multilateral issues. On Wednesday in London, Rishi Sunak opened a Ukraine recovery conference.
INTELLIGENCE. Diplomatic gatherings are fun, but few leave a legacy. France and the UK both have worthy goals to fix international architecture and a bombed-out Ukraine, but there are inherent problems. Macron wants to reform multilateralism, but while France retains its exorbitant privilege of a permanent UN veto and a 4% IMF quota, it is playing at the margins. As for Ukraine, the war is still on. Many are too busy building arms to worry about roads.
FOR BUSINESS. Britain and France are important actors, but their empires are long gone. As price-takers in a world where Indonesia and Brazil now have bigger economies in parity terms, they want to not only stay relevant, but ensure their political and commercial interests aren’t ignored. France spends a lot on multilateralism and doesn’t want to lose out to inevitable change. Britain doesn’t want to lose out to China (or Russia) when Ukraine’s rebuilding starts.
PAKISTAN. Islamabad to worse.
The clock ticks for a broken system.
A Lahore court issued a non-bailable arrest warrant for Imran Khan, local media reported on Tuesday. Pakistan's first bid in a year to purchase spot market LNG failed on Tuesday, with traders avoiding the deal on solvency concerns.
INTELLIGENCE. With time running out for an IMF rescue before 30 June, Pakistan looks set for financial default amid a worsening political crisis that has pitched the military against popular ex-prime minister Imran Khan. The court order is a blow for Khan, who only on Monday received a bail extension regarding a separate charge. Young Pakistanis are voting with their feet. At least 124 are thought to have been onboard a boat that capsized off Greece last week.
FOR BUSINESS. A financial collapse would not just be bad for Pakistan. More asylum-seekers will flee. Unpaid officials will leave more gaps for extremists. But a complete state collapse is unlikely. China and the Gulf will step in, even if the IMF demurs, and probably gain further leverage in the bargain. Pakistan’s top military adviser visited Beijing on Tuesday. The same day, China and Pakistan signed a $4.8 billion nuclear power plant agreement.
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