Iran: Outta options
Also: Saudi Arabia, China, Rwanda, Russia and the Sahel.
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IRAN. Outta options
Cross-border attacks are a sign of panic.
Pakistan warned of "serious consequences" on Tuesday after Iran launched airstrikes killing two children. Iran sent missiles into northern Iraq and Syria on Monday – attacks it said were against Mossad and Islamic State respectively.
INTELLIGENCE. Tehran has a growing list of enemies – most of them domestic. Heading to elections in March, any move against the clerics could be damaging as Ayatollah Khamenei approaches his 85th year and a battle for succession looms. The regime is thus appealing to Iranian nationalism by striking external foes, albeit at risk of retaliation as Iran incurs the rising (and polarising) costs of its support for proxies in Gaza, Lebanon and Yemen.
FOR BUSINESS. Recent terrorist attacks in Kerman and elsewhere in Iran's southeast may justify the strikes politically, but they risk opening a new front with Pakistan, just as the nuclear-armed neighbour pivots back to the West (Army Chief Asim Munir made his first official US visit last month) and perceptions rise that Iran is favouring India over its coreligionists (India’s foreign minister visited this week, signing a major port deal and opening a new route to Russia).
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SAUDI ARABIA. Dropping bombshells
Riyadh sends Washington a message.
Saudi Arabia could recognise Israel if a deal could be found to recognise a Palestinian state, the Kingdom's foreign minister said Tuesday. Riyadh had not yet joined the BRICS group of countries, Saudi Arabia's commerce minister said.
INTELLIGENCE. Riyadh wants to remind the White House it can be helpful, particularly as Washington risks kyboshing its delicate peace negotiations in Yemen with threats to designate the Houthis as terrorists. In doing so, Riyadh is also sending a reminder it can be unhelpful too. Last month it hosted Vladimir Putin. In November, it signed a small but symbolic currency swap agreement with China. It has pointedly avoided support for US operations in the Red Sea.
FOR BUSINESS. Despite the US’s return as a top exporter of oil and gas, Washington still needs to play nice with Riyadh. As the region becomes increasingly unstable, and domestic votes for foreign deployments fall, Saudi Arabia can protect Western interests, though there will always be a quid pro quo. The geopolitical calculation is manifest in plans outlined by the Kingdom’s sovereign wealth fund. This week it hinted at a major foray into semiconductors.
CHINA. Seeing a shrink
Population decline as a Rorschach test.
China's population fell 0.15% in 2023, the second annual decline, statistics showed Wednesday. Annualised GDP grew 5.25% in the fourth quarter, versus 4.9% in Q3. December home prices fell at their quickest pace in over eight years.
INTELLIGENCE. As with most releases, the data shows China is both strong and weak, depending on who you ask. In a country of China’s size, it’s a mix of both, but neither moderating growth nor declining birth rates are a surprise considering the effects of COVID and generational changes globally. In France, birth rates also showed a decline on Tuesday, to their lowest level since World War II. Gen Zs are being blamed for expected flat US retail sales data.
FOR BUSINESS. China is eyeing new incentives for parents, among other stimulus measures, as its halting transition to more “balanced” growth risks derailing other goals in Xi Jinping’s program of “national rejuvenation”. Fewer children mean fewer workers, consumers, soldiers and sailors. But as families face an uncertain housing market and youth unemployment remains high (albeit at just 14.9% in adjusted figures released today), few can blame them.
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RWANDA. Guerillas in the midst
Kigali’s risk-taking is felt beyond the region.
Rwanda said it killed a Congolese soldier and captured two others on Tuesday. President Paul Kagame met Antony Blinken in Davos. Two senior Conservatives resigned ahead of a crucial Westminster vote on deportations to Rwanda.
INTELLIGENCE. Rishi Sunak’s government needs a win on asylum seekers, and mounting concerns over human rights and security in Rwanda aren’t helping. For Washington, the worry is more over Rwanda’s alleged support for the M23 militia, which has destabilised eastern Congo for over 11 years. Despite its economic success, Rwanda is increasingly seen as a bad actor. Last week, Burundi closed its border over a separate claim of Rwandan rebel support.
FOR BUSINESS. Into his third decade of power, Kagame has gone from post-genocide reformer to paranoid autocrat. And as East Africa faces new risks – from the war in Sudan to potential conflict between Somalia and Ethiopia – it needs new thinking. The Intergovernmental Authority on Development, a regional trade bloc, holds its summit in Uganda on Thursday. Sudan suspended ties on Tuesday, following a decision to invite rebel leader Hemedti.
RUSSIA. THE SAHEL. A special place
Moscow makes further inroads in Francophone Africa.
Russia and Niger had agreed to increase defence ties, Moscow said Tuesday, two weeks after France closed its embassy. The Central African Republic had made available land for a Russian base near the capital, an official said.
INTELLIGENCE. Since the recent string of coups across the Sahel, France has been in retreat, leaving Chad its remaining regional ally. Yet like its neighbours in Niger and the CAR, Chad also has burgeoning ties with Russia, which sells it arms and shares an alleged interest in seeing the rebel Rapid Support Forces win the civil war in Sudan. While Chad has projected itself as a Western bulwark (in exchange for increased aid), it is playing a more complex game.
FOR BUSINESS. In the Sahel and elsewhere in Africa, Russia gains access to diplomatic support, natural resources and a potential veto on energy corridors to Europe. Ambitious plans for gas exports from Nigeria, or green energy from the DRC, are complicated not just by geography and non-state actors, but now by the Kremlin. East-west infrastructure, funded through China’s Belt and Road, may, however, be something that Moscow can support.