Russia: Rebellion without a consequence.
Also: Syria, Israel, Ukraine, Greece, Germany, Central America and Pakistan.
RUSSIA. Rebellion without a consequence.
It is too early to draw conclusions about Putin’s regime.
US Secretary of State Antony Blinken said on Sunday Russia's Wagner mercenary crisis had exposed “real cracks” in Putin's rule. China's foreign ministry said on Sunday that Beijing supported Moscow in maintaining its national stability.
INTELLIGENCE. Nobody knows what really happened this weekend, and certainly, nobody knows how it will end. Putin would appear diminished by his loss of control over the Wagner Group, as well as his reversal of vows to punish its leader, Yevgeny Prigozhin, who was instead exiled to Belarus. Yet Putin has also bloodlessly removed a rogue element and, despite the speed with which Wagner entered Rostov, there are no clear signs of Kremlin disunity.
FOR BUSINESS. The distraction of Wagner’s rapid revolt and retreat does not seem to have made a difference at the frontline. It is also unclear whether it has made a difference to Russian public opinion. The impact, if any, may be in how Russia is seen among friends. Any whiff of instability will worry Xi Jinping and may influence how much further Beijing leans into the relationship. The events will also worry Wagner’s clients in Africa and the Middle East.
RUSSIA. SYRIA. ISRAEL. Conflict without an exit.
Moscow still has interests to protect in the Levant.
At least 13 were killed on Sunday after Russian forces struck a rebel-held enclave in Syria’s deadliest attack this year. Kyiv on Sunday accused Israel of siding with Moscow, and of demonstrating a “blatant disregard of moral boundaries”.
INTELLIGENCE. Despite the multiplying distractions at home, Russian forces are still in Syria, supporting the Assad regime to regain remaining rebel territory. Like the US and Turkey, which are also still in Syria to respectively fight remnant Islamic State and Kurdish militias, Russia is using its presence to maintain influence across the region, including in Israel, which is under pressure to send weapons to Ukraine despite its own troubles in the West Bank.
FOR BUSINESS. The conflict in Syria will likely continue for years, despite peace talks host Kazakhstan declaring last week that the war was essentially over. A Russian presence in the region will also continue for years, irrespective of what happens in Ukraine. With the closure of Western markets, the Middle East is vital for Russian firms, many of which are now based in Dubai. Most of the region’s powers are also friendly to Moscow or, like Israel, ambivalent.
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UKRAINE. Giving peace a chance.
Something could be gotten in the state of Denmark.
Security advisers from non-aligned countries and the West met to discuss a peace plan for Ukraine, Kyiv's presidential office said on Sunday. A China Daily editorial on Sunday said the US should not seek to exploit events in Russia.
INTELLIGENCE. The closely held talks brought together G7 advisers and counterparts from Brazil, India, Saudi Arabia, South Africa and Turkey. Though China and Russia were not in the room, the meeting is the clearest sign in months that a political settlement is being seriously discussed. In the wake of Yevgeny Prigozhin’s short-lived mutiny, Putin won’t want to do a deal that will make him look weak, but he won’t have to worry about Prigozhin’s criticisms either.
FOR BUSINESS. The West has promised to support Ukraine “for as long as it takes”, but that doesn’t mean forever. With increased focus on Ukraine’s internal challenges, its postponed elections (otherwise due in March 2024) and its mixed performance on the battlefield, patience is starting to wear. Worries are also rising over the West’s ability to provide more arms at scale. Ukraine uses more artillery every few days than the West’s factories produce in a month.
GREECE. GERMANY. Right side up.
Inflation concerns push a conservative swing.
Greece's conservative New Democracy party trounced its nearest rival by 23 points on Sunday. A further 13% of the vote went to a trio of far-right parties. The far-right Alternative for Germany (AfD) won its first district election on Sunday.
INTELLIGENCE. Europe’s far-right is reviving on inflation concerns, which its voters attribute to climate policy and the war in Ukraine, as much as the standard explanations of post-Covid stimulus and delayed monetary tightening. Ahead of next month’s elections in Spain, where the far-right Vox party won a deal last week to run the local government in Ibiza and Mallorca, centrists are worried about what this all means for the European Parliament’s 2024 elections.
FOR BUSINESS. Europe’s centre-right and left are seen as interchangeable by many citizens. Amid stubborn inflation and chronically low growth, voters are opting for radical alternatives. Whereas it was the far left in the wake of the 2008 financial crisis, it is now the far right. With the example set by Italy’s Giorgia Meloni, this need not mean an abrupt shift from NATO or the EU, but it could unravel much of the neoliberal consensus of the last 30 years.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
CENTRAL AMERICA. Upside down.
Curfews in Honduras and a divisive election in Guatemala.
Honduras announced curfews on Sunday after more than 20 were killed in separate attacks on Saturday. Polls closed on Sunday in Guatemala in a bitterly fought 21-candidate presidential vote, which will go to a second round in August.
INTELLIGENCE. Crime and corruption loom large for both countries, which, alongside neighbouring El Salvador, are the largest sources of irregular migration into the US per capita. Also looming large is China, which Honduras switched recognition to after its election in March, and which is also courting Guatemala, dangling the prospect of security cooperation free of human rights lectures. Alongside Belize, Guatemala is Taiwan’s remaining regional ally.
FOR BUSINESS. Following the recent violence in Honduras, as well as its pivot to Beijing, Washington will worry about the fate of Guatemala, particularly as others in the region – notably El Salvador and Nicaragua – descend into deeper authoritarianism. As Beijing demonstrated last week with Cuba, where it is rumoured to be negotiating a military base, the instability and ambivalence of Washington’s backyard is becoming a growing security and economic concern.
PAKISTAN. Try again.
A final plea to the International Monetary Fund.
Pakistan's parliament on Sunday passed a revised budget with new taxes and spending cuts in an attempt to gain IMF bailout funds, which expire on 30 June. Pakistan's prime minister met with the fund’s managing director on Thursday.
INTELLIGENCE. Unless Pakistan can secure the funds, it will need to turn to China and the Gulf to avoid default. Beijing is in a unique position to help its “all-weather” friend but will want something in return. That could be further concessions, including for Belt and Road projects that have contributed to Pakistan’s fiscal burden. But it could also be a negotiated deal with India, which would reduce risk along China’s border and stymie Delhi’s pivot to Washington.
FOR BUSINESS. An extra $1.1 billion, which is all Islamabad can expect from the IMF, will not solve its long-term ills but will help avoid a credit event that would exacerbate a deteriorating political and economic outlook. Since ousting Imran Khan last year, Pakistan’s government has relied on the military and judiciary to manage popular unrest. With new polls due in November, the freezing of forex accounts or the inability to import goods could tip a crisis into chaos.
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