JAPAN. CHINA. Sashimi slicing.

Chips, not fish, are behind the latest trade spat.

Beijing said on Friday it would tighten Japanese seafood imports following Tokyo’s decision to discharge treated water from the Fukushima power plant. Seoul on Wednesday said it respected the UN’s nuclear safety review of Japan's plan.

INTELLIGENCE. Unlike China, Japan’s food standards are famously strict, but this won’t deter Beijing from increasing pressure ahead of Japanese Prime Minister Fumio Kishida's attendance at next week’s NATO summit. Tokyo is being pressed by Washington to strengthen high-tech export controls amid a rising tit-for-tat between the US and China. Seoul is the other node in the emerging trade war but has so far taken care to avoid stoking too much Chinese ire.

FOR BUSINESS. It once would have been South Korea on which China would have focussed its coercion. In 2017, Beijing boycotted South Korean goods after Seoul deployed US anti-ballistic defence systems in the country. Those defence systems now appear to be returning, but Beijing wants to keep its powder dry and instead exploit historic Korean distrust of Japan. So far, Seoul isn’t listening. Its president will meet Kishida at the NATO summit as well.

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TAIWAN. CHINA. Strait talk.

Beijing wants to keep the West on its toes.

Xi Jinping said on Thursday that China must “deepen planning on war and combat” during a visit to the PLA command responsible for Taiwan. Beijing cancelled a visit by the EU's top diplomat on Wednesday, without giving a reason.

INTELLIGENCE. As Treasury Secretary Janet Yellen arrived in China, Beijing wants to show the West that it is willing to push back on what it regards as its core interests, from Taiwan to the development of its tech sector. Yellen said on Friday that the US seeks “to diversify, not to decouple”, but Beijing will want to see actions, not words. In the meantime, rare earth restrictions remain in place, sabre rattling continues, and US allies are getting cold-shouldered.

FOR BUSINESS. Neither China nor Taiwan wants a war, and neither Washington nor Beijing wants a trade war. But backing down from their respective positions without seeming weak will require deft diplomacy, as well as luck. Increased naval sorties amid a lack of military dialogue leave conditions ripe for an accident. Yellen’s trip won’t yield any breakthroughs but may allow for new lower-level technical talks to quietly diffuse tensions.

Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.

BELARUS. RUSSIA. Where’s Wagner?

The mysterious case of a missing mutineer.

Belarus's president said on Thursday that Wagner mercenary chief Yevgeny Prigozhin had left for Russia. Pro-Kremlin media on Wednesday showed footage of weapons, gold bars and wigs seized at Prigozhin's mansion in St Petersburg.

INTELLIGENCE. The story of the Wagner non-coup has become weirder, with the Kremlin seemingly wanting to both humiliate and rehabilitate the former Putin ally. Moscow has reportedly returned Prigozhin some $111 million worth of assets, which had been seized after his aborted mutiny. Many see this as a sign of Putin’s weakness, but it may be a case of keeping Wagner operationally active while politically neutered. There is still much dirty work for it to do.

FOR BUSINESS. Ritualised shaming has long been a feature of Russian political culture, just as the use of mercenary forces has long been a feature of Russian military doctrine. It’s a fool’s errand to predict what’s next in Moscow’s court drama, but for now it appears that Putin is still pulling the strings. As for the economy, the Kremlin on Tuesday estimated that GDP growth may reach 2% in 2023, despite a widening deficit and lower ruble. The IMF predicts 0.7%.

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UKRAINE. RUSSIA. Cluster duck.

The US provides one terrible weapon to avoid giving another.

The US is expected to announce sending cluster bombs to Ukraine on Friday, multiple outlets reported Thursday. Cluster munitions are banned by 120 countries, including most NATO members, but have already been used in the Ukraine war.

INTELLIGENCE. Washington has likely judged that the reputational cost of sending Kyiv such controversial weapons is worth the benefit of not having to send it air support. The US could have refused to do both, but with Ukraine’s counter-offensive stalling and Volodymyr Zelensky becoming more impassioned ahead of next week’s NATO summit, there may be a calculation that rocket-propelled bomblets could shift the dial without risking nuclear escalation.

FOR BUSINESS. Russia and Ukraine have used Soviet cluster munitions, so Washington’s decision poses an ethical rather than strategic risk. Yet it would not have been taken lightly and suggests desperation. Conventional artillery stocks are low, and high-tech systems are yet to make a meaningful dent. Ukraine has meanwhile asked to join Asia’s CPTPP trade pact. It would be a poor substitute for the EU but could likewise place moral pressure on Brussels.

With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.

ISRAEL. IRAN. A proxy on both houses.

The Middle Eastern shadow war drags in more players.

Israel fired shells into Lebanon on Thursday after rockets were launched into its territory. The US on Thursday accused Russia of dangerous manoeuvres, saying a Russian SU-35 fighter used flares in the path of a US drone over Syria.

INTELLIGENCE. This week’s operation by Israel against Iranian-backed militants in the West Bank is over, but the presumed involvement of Hezbollah in Lebanon – which has recently avoided conflict with Israel – could represent a new phase. Worrying too is the potential for US and Russian involvement. The US is Israel’s main backer but is upset at its ally’s belligerence in Palestine. Russia is getting closer to Iran but wants to keep Israel neutral on Ukraine.

FOR BUSINESS. As Israel and the Arab world stagger towards US-brokered reconciliation, Israel’s main enemy is Iran. Yet as Iran seeks to maintain a tentative rapprochement with its Arab neighbours, brokered by China, it must take care to not cause too much chaos. Iran also seeks a truce of sorts with the US on its nuclear program, but progress has been stymied this week by fiery exchanges at the UN, not to mention a naval standoff in the Persian Gulf.

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PAKISTAN. Things fall apart.

An economic crisis is hurting Pakistan’s security.

Pakistan's military has been forced to halt drills due to a shortage of fuel, Indian media reported on Thursday. A suicide bomber killed three soldiers and a ten-year-old boy in northwestern Pakistan on Wednesday.

INTELLIGENCE. Most countries have a military, the saying goes, but Pakistan is a military that has a country. Still, the powerful armed forces have been weakened this year not only by widespread protests in support of ousted former prime minister Imran Khan, but by a balance of payments crisis that has crimped the defence budget. Elsewhere, the Taliban’s consolidated rule in Afghanistan has emboldened the insurgency of likeminded militants in the northwest.

FOR BUSINESS. While the IMF last week bought Pakistan time with a $3 billion bailout, the country’s structural woes are beginning to impact the army’s ability to keep the peace (or what passes for peace in Pakistan). A nuclear-armed country of perhaps 250 million, Pakistan is too big to fail. China and the Gulf will step in, if reluctantly, but Beijing in particular will extract a further price for any beneficence. It also has infrastructure investments to protect.

Emailed each weekday at 5am Eastern (9am GMT), Daily Assessment gives you the strategic framing and situational awareness to stay ahead in a changing world.

Japan, China: Sashimi slicing.