Russia: Greatly exaggerated.
Also: Moldova, China, Vietnam, Japan and Sierra Leone.
RUSSIA. Greatly exaggerated.
There is so far little evidence of Putin’s demise.
Most Russians think their country is heading in the right direction despite Saturday’s mutiny, according to a survey from Morning Consult on Monday. Russian media meanwhile said a criminal case against Wagner’s leader remained open.
INTELLIGENCE. In his first address since the mutiny, Vladimir Putin was strident but said he would honour a promise to allow Wagner fighters who don't sign-up for the military to join their leader, Yevgeny Prigozhin, in Belarus. Putin also confirmed for the first time that Russian pilots had died in thwarting the rebellion. The Kremlin has meanwhile doused speculation Defence Minister Sergei Shoigu would be sacked, releasing footage of him meeting with officials.
FOR BUSINESS. The Kremlin wants to show it is in control. Western observers should thus be wary of the obituaries being penned by foreign analysts. Prigozhin’s whereabouts are unknown, but not everyone in Ukraine will be gloating. Belarus is 150 kilometres from Kyiv. Having been cut loose from Moscow, Prigozhin and his remaining forces could be even more dangerous, particularly if he wants to rehabilitate his reputation with Putin and earn the right to return.
MOLDOVA. A Shor thing.
A pro-Russian politician forms a new bloc.
Exiled oligarch Ilan Shor said on Monday he had formed the ‘Chance, Obligations, Achievements’ (SOR) bloc, after his Shor, or Șor, Party was outlawed. Shor had instigated a series of pro-Russian protests that have rocked Chisinau.
INTELLIGENCE. A former Soviet republic with a substantial Russian minority, Moldova has been working hard to avoid the fate of Ukraine, including by seeking EU accession. While constitutional neutrality prevents it from joining NATO (and NATO would be reluctant to join a frozen dispute over Moldova’s Russian-speaking enclave Transnistria), Moscow is taking no chances and has thrown its weight behind Ilan Shor, currently in Israel and under US sanctions.
FOR BUSINESS. While Shor won just six of 101 seats in 2021, polls show 30% of Moldovans are pro-Russian, equal to those who are pro-EU. Russia maintains at least 1,000 ‘peacekeepers’ in Transnistria, 300 kilometres from the frontline of Russian-occupied Ukraine. Despite low wages and an educated workforce, few Western firms have been willing to invest in Moldova, which is courting China instead. Its deputy prime minister visited Beijing on 7 June.
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CHINA. Bulls in a talking shop.
The Tianjin ‘Summer Davos’ attracts a global crowd.
Premier Li Qiang told the World Economic Forum’s Asia conference on Tuesday de-risking was a “false proposition”, and it was time to support globalisation. The prime ministers of Mongolia, New Zealand and Vietnam attended.
INTELLIGENCE. Tianjin won't get the same bigwigs who attend the WEF’s Swiss gathering each year, but the presence of New Zealand Prime Minister Chris Hipkins is a win for Beijing, which will want to highlight the Five Eyes member's friendliness in contrast to the US, whose relations with China continue to sour. Hipkins took two air force planes with him, in case one broke down. New Zealand’s tiny defence budget has been a source of concern to the US and allies.
FOR BUSINESS. As the first Summer Davos in four years, China is hoping the conference can deliver some confidence amid the economic gloom. S&P Global cut its forecast for China’s GDP growth to 5.2% for 2023, from 5.5%, following a lower estimate given earlier by Goldman Sachs. But a few speeches won’t make as much difference as the stimulus package investors hope will soon come. Beijing has meanwhile asked banks to lend more to manufacturers.
VIETNAM. Morning in Danang.
The USS Ronald Reagan pays a visit, but not all is well.
Vietnam’s prime minister held talks with his Chinese counterpart in Beijing on Monday, a day after the Nimitz-class aircraft carrier docked in Danang, which in the 1970s hosted the US Navy’s biggest offshore command.
INTELLIGENCE. Washington and Hanoi this year mark a decade as “comprehensive partners”, but Vietnam is taking care to not antagonise Beijing, particularly after a rare protest last month over a Chinese research ship operating in its overlapping South China Sea claim. Attempting to balance the powers, Vietnam and China this year mark 15 years as “comprehensive strategic partners”. China, on Tuesday, said it would deepen cooperation with Vietnam’s military.
FOR BUSINESS. Beyond Hanoi’s strategic juggling act, which also involves Moscow, Delhi and Tokyo, there is pressure to keep the economy growing. While Vietnam has seen reshoring from China, exports are down globally, and low rainfall has led to hydroelectric power shortages. The central bank dropped rates by 50 basis points this month and last week Vietnam was added to the Financial Action Task Force's grey list on weapons proliferation risks.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
JAPAN. Cashing in the chips.
Tokyo buys out a semiconductor materials firm.
Japan Investment Corporation on Monday agreed to buy photoresist manufacturer JSR for ¥909.3 billion ($6.4 billion). JSR, which wants to use the state-backed equity to invest in advanced capabilities, plans to relist in five to seven years.
INTELLIGENCE. Alongside the US and Europe, Japan has been an enthusiastic re-adopter of industrial policy in critical technologies, chiefly microchips, where it is seeking to regain market share from China, Taiwan, and South Korea. JSR began as a government-owned synthetic rubber maker in the 1950s era of import controls and administrative guidance. Its return to semi-nationalisation comes a day after Seoul announced its own fund for semiconductor firms.
FOR BUSINESS. Industrial policy, done right, can lead to the miracles seen by Japan and the Asian Tigers in the second half of the 20th century. Done wrong, it can lead to Argentina or worse. While paying lip service to free trade and the rules-based economic order, developed and emerging economies are increasingly willing to spend big and find out. Yet not everyone will a become future success. Investors should always beware of bureaucrats bearing gifts.
SIERRA LEONE. A strong Bio.
The incumbent president is on course for re-election.
Sierra Leone's electoral commission said on Monday President Julius Maada Bio had a lead of 60% of votes counted. The claim was disputed by supporters of former foreign minister Samura Kamara, who narrowly lost to Bio in 2018.
INTELLIGENCE. An opposition gathering was violently dispersed on Sunday, with a woman killed. Kamara, who is facing a protracted trial over historic corruption claims, has alleged vote-rigging. Bio, a coup leader turned democrat, has championed social issues during his term, but the economy is stagnant. The American Enterprise Institute in February said Sierra Leone was a target of Russia's Wagner Group on account of Bio's mismanagement.
FOR BUSINESS. Wagner is probably not the threat it was – though Moscow said on Monday its “military instruction” work would continue – but Sierra Leone and its neighbours will continue to attract militants and chancers thanks to its poor governance and rich resources. It will also continue to attract extremists and criminals, a further turn-off for Western firms. Al-Qaeda has used Sierra Leone for gem trafficking. Colombian cartels use Freetown as a transit hub.
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