Israel, Iran: Lesser of two evils
Also: the US, Armenia, Georgia, Croatia, and floods.
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ISRAEL. IRAN. Lesser of two evils
Washington may be asked to trade Rafah for Tehran.
The US has agreed to not oppose an assault on the city of Rafah in exchange for Israel not striking Iran, regional outlets said Thursday. Israel would make its own decisions on how to defend itself, Benjamin Netanyahu said Wednesday.
INTELLIGENCE. Joe Biden has asked Netanyahu to “take the win” following Tehran’s retaliatory strikes, of which 99% were intercepted. Reports the US may now look the other way on Rafah to avoid further escalation with Iran have not been verified but contain a grim logic as Biden struggles to manage his ally. None of this solves Biden’s political crisis on Gaza – progressive protesters have blocked roads and bridges across the US – but it could avert a military one.
FOR BUSINESS. We may never know if Netanyahu is forcing a zero-sum choice, yet there are few good options for the US in the Middle East. Even new sanctions on Iran – the conventional policy lever – will have their limit with energy costs stubborn, Russian production damaged by Ukraine, and Venezuela, as of today, back under embargo. Iranian exports, at a six-year high, are among the few factors keeping prices lower than where they would otherwise be.
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UNITED STATES. Saturday night special
The House schedules its votes on Israel, Ukraine, and Taiwan.
The House will vote on a cumulative $95 billion security package on Saturday evening, Speaker Mike Johnson said Wednesday. Three bills will cover Israel, Ukraine, and the Indo-Pacific. A fourth will cover other security measures.
INTELLIGENCE. On Ukraine at least, Johnson faces a mutiny from several Republican members. A second representative hinted at a motion to vacate this week. A further kiss of death has come from the White House, with Joe Biden saying he would sign the bills. A standalone border security measure Johnson has promised may not be enough to placate the hardliners. Donald Trump, though facing his own legal storms, has several days to weigh in.
FOR BUSINESS. Support for Israel and Taiwan is expected. On balance, Congress will likely approve aid for Ukraine too. But what then happens to Johnson afterwards is anyone’s guess. It’s also up for debate whether extra funding will indeed help Kyiv for long. Moscow continues to produce munitions at several rates of NATO combined. The IMF has revised its outlook for Russian growth to 3.2%, exceeding that of the US at 2.7% and the eurozone at 0.8%.
ARMENIA. GEORGIA. Putting the Caucasus back in the bottle
A geopolitical inversion unleashes new furies.
Azerbaijan accused France of "threats" Wednesday after Paris recalled its ambassador. Russia said it would withdraw all its troops from Azerbaijan's formerly Armenian enclave of Karabakh. Protests in Georgia continued for a third day.
INTELLIGENCE. Armenia, a once stalwart Russian ally in the south Caucasus, has pivoted to the West, chiefly France, in recent months after Russia tacitly approved Azerbaijan’s seizure of Nagorno-Karabakh. Armenia is now pursuing Azerbaijan through the Court of Justice International, while trying to strike a peace deal with its neighbour, which in turn is getting closer to Russia. Georgia, once the most pro-Western of the three, has likewise shifted to Moscow.
FOR BUSINESS. Russia has grown closer to Azerbaijan due to energy and geography – factors that will eventually force Armenia to back down. Its dealings with Georgia are more about preventing a mini-Ukraine, but the anti-foreign (i.e. Western) interference its Moscow-friendly government passed on Wednesday have led to maidan-style protests. Around 20,000 marched in Tbilisi (population 1 million). Punches were thrown in parliament. EU flags were waved.
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CROATIA. Nothing to crow about
The government survives, but with an eroded minority.
Prime Minister Andrej Plenkovic's centre-right HDZ party won 60 seats in Wednesday's election, preliminary results showed early Thursday, ahead of the Social Democratic Party, backed by President Zoran Milanovic, at 42 seats.
INTELLIGENCE. The HDZ's five-seat decline wasn't enough for it to lose power but will make coalition-building more difficult. The votes did not flow cleanly to the SDP-led "Rivers of Justice" coalition, which only gained one seat, but to several minor parties. The outcome could weaken Croatian support for Ukraine – which Milanovic has recently grown sceptical of – with many on the left and the right criticising Plenkovic’s pro-Kyiv stance during the campaign.
FOR BUSINESS. Like much of Europe, pro-Russian populism in Croatia is not the preserve of the far-right. And as growth rates stall, many have used Kyiv as a cipher for issues – inflation, migration, farming – with complex causes beyond national or EU control. Croatia’s economy is better than most – forecast to rise 3% this year – but inflation is among the eurozone’s highest. Foreigners have also crowded many young people out of the housing market.
FLOODING. Seeds of doubt
Questions about culpability in natural disaster.
Flights from Dubai remained delayed Thursday after the worst floods in 75 years. Kazakhstan's president said recent floods were a national disaster after overflowing rivers displaced 200,000 across the north and neighbouring Russia.
INTELLIGENCE. Heavy floods have killed scores across Russia, Afghanistan, Pakistan, Oman, Tanzania, and Finland in recent days. In the wake of last week's European Court of Human Rights ruling on Switzerland's need to do more on climate change, lawyers and activists globally are increasingly looking for who to blame for events once regarded as an act of God. Specifically for Dubai, many are also wondering if government cloud seeding programs are to blame.
FOR BUSINESS.Experts don’t think seeding was to blame, but the practice has previously served as a lightning rod for floods in Dubai and elsewhere. Fears about humanity’s climatic contributions, and solutions, are growing. This may cause governments to think twice about other geoengineering practices, whose side-effects would have someone to blame, despite the failure of emissions pledges, demand reduction, and green energy to make an impact.