Israel, Palestine: Experience over hope
Also: the US, China, Japan, Russia, the DRC, and Rwanda.
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ISRAEL. PALESTINE. Experience over hope
Netanyahu says no to a peace proposal.
Benjamin Netanyahu said Wednesday a Hamas proposal for a four-month ceasefire was "delusional" and Israel's aim remained "complete victory" in a matter of months. Antony Blinken said there was still "space" to continue negotiations.
INTELLIGENCE. The US admits there were parts of the proposal Israel was never going to accept, but amid reports that at least 32 of the 136 Israeli hostages have been killed (another 20 are feared dead), it seems unlikely Israel will accept a pause in any event. Netanyahu hopes a swift victory, on his terms, will restore his fortunes. Washington hopes to merely be the one to broker peace. Moscow, meanwhile, is inserting itself more forcefully in negotiations.
FOR BUSINESS. As the war becomes a liability for Washington, which also seeks to manage escalation (despite the killing of a Kataib Hazbollah chief on Wednesday), frustrations are growing over Netanyahu’s stance. Ties with Israel will recover, but Washington will need to avoid alienating Riyadh, which has been asked to offer difficult trade-offs for the carrot of a new security pact. As is apparent to the region, the US is not the preeminent player it once was.
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UNITED STATES. Polarity and polarisation
Partisan gridlock is damaging US standing in a multi-polar world.
Republicans in Congress turned on each other Wednesday after efforts to impeach the Homeland Security Secretary and pass a standalone aid package to Israel failed. A bipartisan border security deal tanked in the Senate the same day.
INTELLIGENCE. The Mayorkas impeachment and Israel ploys were always meant as theatre, but theatre does not just entertain, it distracts. Amid real-world emergencies, and another impending budget deadline in March, time is running out for US leadership, even if the noise of the presidential election makes the clock hard to hear. Both sides of the aisle are partly to blame, but compromise is proving harder as partisanship crosses policy and into personality.
FOR BUSINESS. The rising animus between Republicans and Democrats is fuelled by the unpopularity of their two leading candidates. As questions on Donald Trump's presidential immunity and eligibility head to the Supreme Court, a special counsel report into Joe Biden's handling of classified documents is expected in the coming days. Elsewhere, Biden's own impeachment probe rolls on and Chinese and Russian media are boosting narratives of a US civil war.
CHINA. Enter the wood dragon
A market shakeup ahead of the Lunar New Year.
Shares continued to rise Thursday after Xi Jinping replaced the head of China’s securities watchdog. Consumer and producer price data showed continued deflation over January. Chinese markets break for the Lunar New Year on Friday.
INTELLIGENCE. According to China’s zodiac, 2024, a wood dragon year, augurs change. The last such year, 1964, saw Mao’s first nuclear test and the start of his ‘third front’ drive in the interior. For Xi, a 1953 water snake (lively and opportunistic), there’s no need to wait for the heavens, but changing a key regulator before a market break will give traders time to think. Others will also have time to consider his New Year call last week to boost “combat readiness”.
FOR BUSINESS. With expectations of tighter short selling controls and state-directed buying, many investors spot a buying opportunity in Chinese shares despite a tepid economy. But new regulator Wu Qing, known as the “broker butcher” for prior regulatory roles, could be less a friend to markets than to Xi’s goals for state control.US-China talks this week are meanwhile hoped to be followed by a visit from Janet Yellen, which will at least provide some stability.
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JAPAN. RUSSIA. Kuril intentions
Kishida promises to keep pursuing a peace deal.
Fumio Kishida said Wednesday he remained committed to pursuing a peace deal with Russia over four disputed islands, despite difficult relations due to Ukraine. Moscow last week said if Tokyo wanted peace, it should drop its claims.
INTELLIGENCE. Japan claims the southern Kurils, occupied by Russia since 1945, under an 1855 treaty marked annually on 7 February. Kishida’s remarks did not deviate from the script but received more attention than usual as a pod of orcas, trapped in ice nearby, broke free. Attention was also greater after Vladimir Putin said last month that he hoped to visit the islands for the first time. Moscow has recently begun deploying new weapons systems there.
FOR BUSINESS. The Kurils offer little more than fishing EEZs, but as issues of pride and sovereignty, they serve as useful bargaining chips in other disputes. Tokyo was initially wary of joining Western sanctions on Russia due in part to the Kurils – it also has major investments on the adjacent Sakhalin Island. They were also a central cause for former prime minister Abe Shinzo, whom Kishida has generally tried to emulate (albeit unsuccessfully in the polls).
DEMOCRATIC REPUBLIC OF CONGO. RWANDA. Never Goma give you up
Kigali’s proxies continue to cause havoc in Congo’s east.
Around 70% of the residents of a town near the city of Goma fled Wednesday after rebel bombings killed two aid workers. The UN finalised the timeline of its withdrawal from the DRC last month, with final forces to go by December.
INTELLIGENCE. Kinshasa requested the UN end its largely forlorn mission, despite protests from the aid community. Yet it could soon regret this should the Rwanda-backed M23 rebel force retake Goma, which, with an estimated 2 million residents (many refugees from nearby fighting), could now be eastern Congo’s largest population centre. Two South African peacekeepers were injured outside Goma last week after M23 fighters shot at a UN helicopter.
FOR BUSINESS. Goma borders Rwanda and is at the heart of a long-running ethnic and resource-driven conflict. Many residents fear it could soon be under siege, with few of the region’s 150 armed groups caring much for humanitarian concerns. Yet any excesses by the M23 and other ethnic-Tutsi militias could embarrass Rwanda, which is keeping alive hopes for a UK refugee deal, and whose president recently returned from a hero’s welcome in Washington.