Russia, China: Xi-ing red
Also: the EU, Argentina, Thailand, and Singapore.
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RUSSIA. CHINA. Xi-ing red
Putin visits his ‘no-limits’ friend.
Vladimir Putin said he backed China’s plan to settle the Ukrainian conflict Tuesday, ahead of a visit to Beijing. US Secretary of State Antony Blinken said Washington would seize Russian assets to help pay for the rebuilding of Ukraine.
INTELLIGENCE. Putin said China truly understood the root causes of the Ukraine war and praised its 12-point principles paper previously outlined by Beijing. The endorsement stands in stark contrast to the unenthusiastic reception it received at the time from Kyiv. Putin will visit Beijing to continue to shore up support for his regime and press China to provide tangible assistance in the form of weapons. Beijing has so far resisted, at least officially.
FOR BUSINESS. While trade ties between China and Russia go from strength to strength – China is heavily buying discounted Russian oil unable to traded elsewhere due to sanctions – there is lingering political mistrust between the two nations. China will not want to overcommit to its Russian relationship. Meanwhile, Anthony Blinken said in Kyiv on Tuesday that Ukraine is getting “closer to NATO”, in the wake of the US’s belated $61 billion support package.
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EUROPE. MIGRATION. Wheels of change
Border reforms are unable to keep pace.
The European Council approved 10 legislative acts relating to the New Pact on Migration and Asylum on Tuesday. The Pact attempts to introduce common rules around border procedures and ensure a fair burden between member states.
INTELLIGENCE. Ahead of next month’s European elections, the new pact is an attempt to take some of the heat out of far-right messaging on immigration. But the reforms won’t enter into force until 2026, well after the 2024 elections have played out. Since 2015, Europe has seen a steady influx of refugees, with large numbers fleeing Afghanistan and Syria, but increasing numbers coming from conflicts in the Sahel, where European powers once held sway.
FOR BUSINESS. The wheels turn slowly in European bureaucracy. The New Pact was first proposed in 2020 by the European Commission. Additionally, the EC still needs to present its Common Implementation Plan, including country targets and timelines. Pressed by local constituencies, countries such as France and Germany have moved ahead with domestic immigration reform bills limiting citizenship rights, welfare benefits and family reunification.
ARGENTINA. Inflating expectations
Topline figures look good but belie pain on the ground.
Prices rose at their lowest monthly rate for half a year, data on Tuesday showed, though annual inflation was still at 289%. The International Monetary Fund praised Argentina’s “decisive implementation” of macroeconomic reforms.
INTELLIGENCE. President Javier Milei has led a public spending slash-and-burn campaign since being elected, resulting in some wins in overall public finance position, but increased pain for working Argentines. The IMF has been a strong proponent of his policies, announcing on Monday it would provide an additional $800 million in loans. But the intensity of the shock to the real economy is causing many to question the speed at which Milei is driving reforms.
FOR BUSINESS. Argentina is in a deep recession, with analysts predicting the economy to contract by around 2.8% this year. But investor sentiment is high, with Argentina bonds having rallied since Milei was elected on the back of market-friendly policies. Meanwhile, Milei has seemingly softened his stance on China since coming into power, revealing a more pragmatic side given that Chinese investment continues to drive a huge part of the economy.
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THAILAND. Shattering illusions
The death of an activist draws attention to judicial processes.
A hunger-striking activist died in a Bangkok jail Tuesday. Netiporn Sanesangkhom, 28, had been campaigning for reform to laws relating to the monarchy, including so-called lèse-majesté prohibitions against defaming the royal family.
INTELLIGENCE. Sanesangkhom was awaiting trial, having been put in jail in January 26 for having conducted illegal opinion polls on the royals. She was part of an activist group known as “Thaluwang” – meaning ‘shattering the palace’ – which aimed to question the King’s power. It’s risky business. Criticising or insulting the royal family still carries a penalty of up to 15 years in prison. King Vajiralongkorn has shown little clemency to his critics, Thai or foreign.
FOR BUSINESS. Thailand is stuck in an economic rut, with regional competitors Vietnam, Malaysia, the Philippines, and Indonesia bouncing back more strongly after Covid-19. It is also stuck in a cycle of low productivity growth, and its low education base means it struggles to compete in international services beyond tourism. A spotlight on human rights highlights a parochial focus on custom and tradition. It won’t help attract critical foreign investment either.
SINGAPORE. Leet it be
A long-planned changing of the guard is complete.
Lee Hsien Loong stepped down from his prime ministership Wednesday, taking up a “Senior Minister” role as had his father before him. He makes way for Lawrence Wong, 51, a member of the so-called “fourth generation” of leaders.
INTELLIGENCE. Lee had been in power for 20 years in Singapore. While initially in the shadow of his father, Lee Kuan Yew, widely considered one of the great statesmen of the 20th century and the founder of modern Singapore, Lee Hsien Loong was also able to make his mark. Under Lee’s watch, Singapore’s GDP per capita has doubled and, against stiff competition from Hong Kong, the city-state firmly established itself as a global financial powerhouse.
FOR BUSINESS. Incoming prime minister Wong, the former finance minister, will not change Singapore’s overall dynamic, which will remain business-friendly and open. Wong’s PAP party is centrist and (largely) stable. Singapore is gaining momentum in challenging Hong Kong for supremacy as a regional hub, particularly as the number of family offices and money managers increases, and as Hong Kong battles a range of blows to its once freewheeling image.