Israel, Palestine: Swept away
Also: Japan, the Netherlands, Bangladesh, Australia, and Papua New Guinea.
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ISRAEL. PALESTINE. Swept away
Biden’s pier is taken up and thrown into the sea.
A military pier off Gaza will be removed for repairs, the Pentagon said Tuesday, after parts of the structure were washed into the Mediterranean. Around 900 tons of aid have been delivered to it by sea since it was completed two weeks ago.
INTELLIGENCE. The pier cost an estimated $320 million and involved 1,000 personnel, including three seriously injured in a forklift mishap. Its limited duration is symbolic of the US's efforts to deliver aid to Gaza and balance its military assistance to an ally while managing global opprobrium. In short, the pier was expensive, inelegant, poorly planned and seemingly poorly constructed. It remains to be seen if it becomes the symbol of US statecraft writ large.
FOR BUSINESS. The pier didn't matter much for aid deliveries, which continue to trickle in overland. Yet it is another blow to US prestige in a conflict where the Biden administration has been seen as impotent and ignored. Israeli tanks have otherwise rolled into central Rafah and Hamas continues to hold hostages. Saudi Arabia, which the US was hoping to strike a grand bargain with to end the war, on Tuesday said Israel was committing “genocide massacres”.
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JAPAN. Carried away
A weak yen becomes more burden than benefit.
Finance Minister Shunichi Suzuki said he was more concerned about import prices than exporter profits as the yen traded near 157 to the dollar Tuesday. Japan’s net external assets rose to ¥471.3 trillion ($3 trillion), the world’s biggest.
INTELLIGENCE. The splurge on overseas assets is partly a consequence of the yen-dollar carry trade, where low interest rates in Japan are used to buy dollar assets. This is attracting attention not just in Tokyo, but overseas, where calls are mounting for the Bank of Japan to intervene before more drastic efforts – US tariffs or a new "Plaza Accord" – are sought. A weak yen is moreover harming wage growth, which has been a key BoJ excuse for keeping rates low.
FOR BUSINESS. Low salaries in dollar terms are disincentivising expatriate labour, which in turn keeps wages flat despite low unemployment levels. Low interest rates and a weak yen also belie an otherwise strengthening economy, not to mention core inflation at 2.2%, which is high by modern Japanese standards. Another sign the cheap days may soon be over are the OECD’s estimate of purchasing power parity, which suggest the yen should be at 95 to the dollar.
THE NETHERLANDS. The Schoof drops
Geert Wilders’ coalition appoints a prime minister.
Ex-spy chief Dick Schoof was named leader of the new Dutch government Tuesday. Led by the hard-right Freedom Party and joined by the centre-right VVD and two smaller parties, Schoof's coalition will focus on curbing overseas migration.
INTELLIGENCE. Schoof will have his work cut out for him, with most of the policy levers in the hands of the EU, which faces a parliamentary election on 9 June. His government will hope the populist turn that swept it to a surprise victory last year will hold for the rest of the bloc. Europe’s centrist majority has otherwise to date tried to balance the needs of business for labour with voters concerns on cost of living and identity. That balance is getting harder to strike.
FOR BUSINESS. EU unemployment stood at 6% in March, historically low. Dutch unemployment is at 3.7%, higher than in March but still contributing to above-average inflation and underscoring a labour shortage that is economy-wide but particularly acute in the hospitality, construction and IT sectors. Trying to control migration will make this problem worse, but businesses don't have a vote, even in the homeland of the world’s first multinational corporation.
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BANGLADESH. White lies
The age of development miracles is past.
Thousands remained without power Wednesday after the Bay of Bengal's first cyclone in a year destroyed villages and killed 16. Prime Minister Sheikh Hasina claimed a "white man" had offered to solve all her problems for an airbase.
INTELLIGENCE. Bangladesh was once Asia's biggest unsung success, lifting tens of millions from poverty in a women-led development program and creating a thriving export sector. But as Hasina clocks her 15th consecutive year in power (she also led from 1996 to 2001) the miracle is over. Facing greater flood risk, increased competition from India, and an unstable Myanmar, her increasingly draconian rule is resorting to a populist and erratic playbook.
FOR BUSINESS. Hasina alleged Sunday an unnamed country wanted to carve a “Christian” nation from Bangladesh and Myanmar. It’s not the first conspiracy theory peddled but contains a grain of truth in that Bangladesh sits at a strategic location, where the distance from China to the Indian Ocean is shortest, and has been courted by great powers before. And though not Western, there are many fiefdoms in Myanmar now close to de facto independence.
AUSTRALIA. PAPUA NEW GUINEA. So where the bloody hell are you?
A humanitarian disaster becomes political debacle.
Thousands were ordered to leave PNG's Enga region Tuesday after the death toll from a massive landslide approached 2,000. Prime Minister James Marape faced a no-confidence vote after his finance minister defected to the opposition.
INTELLIGENCE. The events are unrelated, but a slow response to the Enga disaster has underlined dissatisfaction with Marape, who faced an earlier no-confidence vote in February after riots in Port Moresby. Marape has leaned closer to the West, in contrast to PNG's neighbour, Solomon Islands, with a defence pact with Australia and a basing deal with the US. But unless the West steps up its assistance, the economic gravity of China may prove unstoppable.
FOR BUSINESS. Australia announced $2.5 million in emergency assistance Monday. This is likely to be just a downpayment, but in contrast to the $600 million it promised last year to fund a local rugby league team, the sum looks pitiful. Australia is PNG's largest donor, and will likely remain so for some time, but China is eyeing strategic influence. It has deep pockets and few limits on how it distributes aid. Rugby may soon be not the only game in town.