Israel, Palestine: Siege tactics
Also: climate, Ecuador, Mexico, Zimbabwe, and Togo.
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ISRAEL. PALESTINE. Siege tactics
Netanyahu expresses determination to storm Rafah.
Benjamin Netanyahu pledged an assault on Rafah Tuesday as US Secretary of State Antony Blinken arrived in Israel to progress truce talks. The International Court of Justice rejected a request for Germany to halt military aid.
INTELLIGENCE. Netanyahu was defiant in stating the IDF would enter Rafah, regardless of whether any ceasefire with Hamas is reached, just as Blinken arrived. Despite protests from Tel Aviv to US campuses, Netanyahu not only needs to appease his nationalist colleagues in government but also likely believes his rhetoric that “total victory” is the only path to peace. And at the very least, a hardened stance, to the bitter end, maximises his negotiating leverage.
FOR BUSINESS. Hardline cabinet members have demanded an assault on Rafah. Netanyahu’s government could face disintegration if he agrees with any deal not to invade Rafah, even if it is broadly popular in and beyond Israel. The UN appealed for other states “with influence” to stop an assault but even the US, which continues to send warnings, has limited sway. Appeals to divest from Israeli assets will also, judging from history, have a limited effect.
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CLIMATE. Coaled call
A timeline in writing is significant, even if it is doused in exceptions.
Group of 7 environment and energy ministers committed Tuesday to phase out coal by 2035. Exceptions will remain for countries that are still likely to be reliant on coal, such as Japan, where coal continues to provide 30% of its energy.
INTELLIGENCE. Multilateral communiqués are usually watered down to the greatest extent possible, creating room for countries to continue doing as they need. In that respect, the statement is somewhat significant in finally placing a date stamp on the G7’s commitment to phase out coal. However, each country will likely still adhere to its own timeline. Japan, which has increased its use since the Fukushima nuclear disaster, refuses any concrete date at all.
FOR BUSINESS. Britain, France, Canada, and Italy have said they would phase out coal by 2030. The US and Germany are ‘taking major steps’ to do so. But no country will bind itself if the date approaches and the energy transition is still lagging to the point it would harm these economies. The UN’s Intergovernmental Panel on Climate Change and the OECD’s International Energy Agency have recommended a coal phase-out by 2030 and a gas phase-out by 2035.
ECUADOR. MEXICO. Glas houses
Ecuador doubles down on a diplomatic scuffle.
Mexico launched its case against Ecuador at the International Court of Justice Tuesday, accusing Quito of breaching international law when it stormed the Mexican embassy. Ecuador launched its own case against Mexico on Monday.
INTELLIGENCE. Ecuador filed a case in the ICJ accusing Mexico of illegally granting asylum to former vice president Jorge Glas, who had previously served prison time for corruption and has been accused of links to the cartels that have ravaged Ecuador in recent months (and threatened to upend its 2023 elections). The housing of Glas at Mexico’s embassy in Quito precipitated Ecuador’s raid. Mexico said Ecuador had created a “disconcerting precedent”.
FOR BUSINESS. Relations between Ecuador and its neighbours have crashed. Leaders across the region condemned the raid. Ecuador is beset by a wave of violence, with gangs unleashing attacks and setting off car bombs. Thousands are emigrating out of Ecuador to seek jobs elsewhere. Its emerging image as an unapologetic diplomatic pariah may be domestically popular but will only harm its chances of attracting the investment it desperately needs.
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ZIMBABWE. A leopard never changes its currency
A former breadbasket continues to play basket case.
Zimbabwe’s new currency, the ZiG, began physical circulation Tuesday. It replaces the existing bond notes and the Zimbabwean dollar, launched in 2016 and 2019, respectively, which had become non-functioning currencies.
INTELLIGENCE. The attempt to replace one currency with another is doomed to fail. There are already reports that government departments are refusing to accept the ZiG, which was launched electronically in April. Zimbabwe famously had inflation of 79.6 billion per cent per month before the currency crashed in 2009. Successive re-launches also met with failure. For Zimbabweans, it’s all a giant sham – most continue to simply use US dollars for payments.
FOR BUSINESS. While the country remains in an economic quagmire, any new currency will likely collapse. Locals ask themselves how they can trust the currency when the government itself does not. Across the border in Zambia, the restructuring of external debt to bondholders poses some ray of hope for the region. Zimbabwe, with around $14 billion owed to international institutions and creditors (66% of its GDP) could take a few notes from its neighbour.
TOGO. Gnassingbé from the same songsheet
Sham elections in a country ruled by a corrupt dynasty.
Results trickled in Tuesday from Togo’s parliamentary elections. The vote included a crucial decision on whether to amend the constitution to allow parliamentarians to directly choose the President instead of via presidential elections.
INTELLIGENCE. Wedged between Ghana and Benin, Togo is tiny and overlooked, but has been eyed by Russia in recent months for its potential as a sea route to its newfound proxies in the Sahel. While democratic in name, and a new (if improbable) member of the Commonwealth, the Gnassingbé family has ruled it for the past 57 years. The clan has cracked down on opposition, banned protests against the constitutional changes, and expelled foreign reporters.
FOR BUSINESS. Efforts to draw in external capital, led by the World Bank and the IMF, have largely failed. It’s hard to see how these elections will change the country’s direction. The interest of Moscow is troubling and graft remains rampant. There are, for example, ongoing and credible allegations that the phosphate sector, one of the country’s most important exports, is managed by the presidential office, providing an official sanction to corrupt activities.