North Korea: So lonely, so be it
Also: Nauru, Taiwan, the World Economic Forum, Yemen, and Nigeria.
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NORTH KOREA. So lonely, so be it
The Democratic People’s Republic edges further away.
Pyongyang said in a statement on Tuesday it would abandon its policy of reconciliation with the South. Kim Jong Un called for a redraft of the constitution to remove any prospect of a shared Korea, upending decades of official policy.
INTELLIGENCE. While quietly released by local media, the statement is significant and discards a longstanding goal of reunification, not to mention a genuine aspiration for many Koreans. Pyongyang, which is beginning to open up after years of COVID isolation, also ordered the abolishment of several agencies that had sought to improve dialogue with Seoul. South Korean President Yoon Suk Yeol described the move as “anti-national and anti-historical”.
FOR BUSINESS. The move towards a permanent split comes asthe DPRK builds up arms with help from Russia, which its foreign minister is visiting this week. Beyond moving Korea into a dangerous new phase – with channels for cooperation reducing and space for diplomacy narrowing – it also forecloses the South’s long-held goal to merge its technical heft with the North’s cheap labour and natural resources, and thus truly challenge China and Japan.
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NAURU. TAIWAN. Switchback
Another former Taiwanese ally switches recognition to Beijing.
Nauru officially stopped recognising Taiwan on Monday, shifting its diplomatic recognition to the People’s Republic of China. The decision came after Taipei’s election the day before, which returned the Democratic Progressive Party.
INTELLIGENCE. Nauru’s defection is unlikely to shift the tectonic plates of international affairs. It is a minnow nation of just 10,000. Yet, Nauru becomes the tenth former Taiwanese ally to have switched recognition during the DPP administration. Just 12 remain – mostly small nations in the Pacific and Latin America. Among them, Guatemala, which inaugurated a new reformist president on Monday and is Taiwan’s oldest remaining ally, is thought to be next.
FOR BUSINESS. Once rich through phosphate mining, Nauru is a prime example of the ‘resource curse’. After its phosphate was exhausted in the 1990s, the trust fund set to ensure sustainable development was slowly squandered. To ensure the switch, Beijing likely offered financial incentives to Nauru which is heavily dependent on foreign aid. Other ex-allies, such as Honduras, have admitted money was a factor in switching recognition to China from Taiwan.
WORLD ECONOMIC FORUM. Date with Davos
The annual event struggles to rebuild its image.
The 2024 World Economic Forum, held in the ritzy ski resort of Davos-Klosters in Switzerland, got underway on Monday. Presidents Macron, Zelensky and Milei will attend, but no other G7 leaders plan to. China has sent its premier.
INTELLIGENCE. The annual meeting brings together political, business and civil society leaders to discuss issues of global importance such as trade, poverty and the environment. That, at least, is the brief. The reality is the WEF is suffering an identity crisis. Its glitz is out of touch with everyday concerns and ongoing conflicts. And its globalisation agenda is failing to resonate, particularly as nationalism rises and schisms widen in the slowing global economy.
FOR BUSINESS. This year’s theme – ‘Rebuilding Trust’ – is self-referential. Leaders need to rebuild trust in globalisation (and globalisation fora such as WEF). And as much as talkfests get a bad rap, leaders need to keep talking as challenges morph and opportunities for neutral, face-to-face gatherings lessen. Many politicians are keen to avoid the criticism of a perceived junket, but business understands. Some 800 CEOs and chairs are in attendance.
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YEMEN. Hou dunnit
Commercial shippers are on alert after more Houthi strikes.
A US-owned container ship was hit by a Houthi missile on Monday, the first confirmed attack after retaliatory US and UK strikes on Yemeni soil last week. Iran sent missiles into Iraq on Monday, targeting what it said was a Mossad base.
INTELLIGENCE. The ship was hit in the Gulf of Aden, just beyond the Red Sea. The strike hit the hold, but early reports suggest there were no injuries or damage to goods. The attack raises the stakes for another Western response. The UK has said last week’s strikes were a “one-off” and it doesn’t want to get drawn into a wider mess. But the pressure will mount for another attempt, with Houthi facilities evidently operational and its leadership seemingly undeterred.
FOR BUSINESS. Since the UK/US strikes last Thursday, traffic through the Red Sea dropped substantially. And Qatar has announced it will not send LNG through the Red Sea until the risks subside. The Houthis claim to have hit over 30 ships over the past six weeks. While still claiming the attacks are limited to ships with Israeli connections, it’s patently untrue and shipping companies will continue to avoid the route, forcing additional costs onto traders.
NIGERIA. Refined offering
Locals hope new production will ease petrol prices.
The Dangote petroleum refinery, Africa’s largest, began production on Saturday. The $19 billion project, located on the outskirts of Lagos, will have the capacity to load up to 2,900 trucks per day with fuel for delivery.
INTELLIGENCE. Proven Nigerian oil reserves are around 37 billion barrels and the country is a top-10 global exporter. But despite having abundant hydrocarbons, Nigeria has been heavily reliant on imported petroleum. Most state-run refineries have, for years, suffered from a lack of productive capacity and poor maintenance. Petrol prices increased significantly after President Bola Ahmed Tinunu removed import subsidies upon his inauguration in May 2023.
FOR BUSINESS. Dangote claims it can produce all of Nigeria’s gasoline, diesel, kerosene, and jet fuel when it runs at capacity. While Nigerians hope it will ease prices, past subsidies fuelled excessive and inefficient consumption, not to mention persistent budget deficits. The new production is unlikely to flood the market in the same way, but it will delay any putative moves to electrify transportation and ease pollution in Lagos, a congested city of 21 million.