Taiwan, China: Mime and punishment
Also: the US, Kenya, Israel, Palestine, and Georgia.
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TAIWAN. CHINA. Mime and punishment
Beijing sends a thinly veiled warning.
China continued "punishment" war games for a second day Friday, demonstrating its ability to seize Taiwan. Chip firms ASML and TSMC had developed the ability to remotely disable production in case of invasion, Bloomberg said Tuesday.
INTELLIGENCE. The PLA’s elaborate air and sea exercises were ostensibly a message to Taiwan’s new president, Lai Ching-te, but seem to have caused more consternation in the West than Taipei, which is more focussed on the rowdy protests inside and outside parliament over a new legislative oversight bill. Amid largely symbolic sanctions on US defence firms, China wants to signal its displeasure over recent trade measures without necessarily escalating them.
FOR BUSINESS. Taiwan has put its military on high alert but invasion remains very unlikely. That said, there are plenty of steps Beijing could take to pressure Taipei that aren’t reflected in the share prices of firms that rely on the island’s semiconductor industry, including blockades, cyber-attacks, disinformation campaigns and sanctions. Nvidia, whose shares topped $1,000 on Thursday, makes 90% of its chips under contract in Taiwan. AMD has struggled to diversify.
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UNITED STATES. DOMESTIC POLITICS. Grave expectations
More Americans fear violence at the polls.
Two-thirds of voters are concerned about post-election violence, an Ipsos poll found Thursday. Fears are evenly spread by affiliation, a Morning Consult poll found. Republicans claimed the White House wanted to assassinate Donald Trump.
INTELLIGENCE. The polls may not say anything new but are troubling in a world where US leadership is increasingly in doubt. US adversaries have an interest in propagating the findings – and diminishing Washington’s attempts to support democracy elsewhere – with key votes also being held this year in India, the UK, the EU and Mexico. Trump’s comments about the FBI being “locked and loaded ready to take me out” in August 2022 have added fuel to the fire.
FOR BUSINESS. Markets are looking through febrile US politics for now but could react closer to November, which in turn could harm Joe Biden’s chances at re-election (betting markets already favour Trump by 3 points). A separate poll meanwhile shows 56% of Americans believe the US is in recession. As on most issues, pundits are split on who would cause the most violence – Trump’s MAGAs, or Biden’s progressives – but in the end, it may not really matter.
UNITED STATES. KENYA. Ruto cause
The partnership with Nairobi goes beyond Haiti.
Barack Obama, Bill Clinton and assorted celebrities attended a state dinner for Kenya's president Thursday. Joe Biden earlier thanked William Ruto at a White House news conference for Kenya leading a multinational police force to Haiti.
INTELLIGENCE. Nairobi this week sent advancers to Port-au-Prince, which is 80% held by local gangs, but a full deployment has reportedly been delayed again. Either way, the US has other reasons to deepen ties with Kenya, as other African powers move closer to Russia and China. Kenya, further, is one of the few regional players with good offices in Congo, Sudan, Ethiopia and Somalia, which are all conflict zones spinning out of Washington’s control.
FOR BUSINESS. Ruto has a controversial past and Kenya is not without blemishes, but in a return to Cold War logic, the US is laying the red carpet for an ally – now officially one of the US’s most important – that has both the ability and willingness to support the West (until its next election, in 2027). Kenya is also among a handful of countries pursuing deeper economic ties with the West. It is negotiating an FTA with the US. It recently ratified one with the EU.
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ISRAEL. PALESTINE. Leave thy neighbour
Israel becomes more isolated, and not just in Europe.
Israel recalled its ambassadors to Norway and Ireland after they joined Spain in recognising Palestine. Officials said they were ready for the worst as the International Court of Justice prepared to rule on a Gaza genocide case Friday.
INTELLIGENCE. Western condemnation has led local and overseas headlines, as Israel parses global reactions to the International Criminal Court’s decision to issue arrest warrants for Benjamin Netanyahu and his defence minister. Yet Arab moves against the Jewish state could matter more, particularly as the US seeks a quixotic deal with Saudi Arabia. Egypt recently joined the ICJ’s case. Bahrain, which recognised Israel in 2020, now wants to get closer to Iran.
FOR BUSINESS. Bahrain’s king said he wanted rapprochement with Iran during a visit to Moscow Thursday. Egypt’s foreign minister has meanwhile visited Tehran for the first time in 44 years. Israel continues to enjoy practical cooperation from key Arab states – as shown by their role in shooting down Iranian missiles and alleged interest in leading a Gaza peacekeeping force – but close ties with Israel are getting politically risky, just as they are in the West.
GEORGIA. Agent provocateur
The West makes another stumble in the Caucasus.
The US announced visa restrictions on Georgia Thursday, after the passage of its “foreign agent” law. Georgia's prime minister accused the EU of "blackmail" and an assassination threat, which Brussels said was “taken out of context”.
INTELLIGENCE. Prime Minister Irakli Kobakhidze seeks to paint Europe as one of the agents of foreign influence his law is supposed to manage, but EU Commissioner Oliver Varhelyi was clumsy to have mentioned the attempted assassination of Slovakia's leader when issuing a warning to Tbilisi. Likewise, by issuing travel bans to key officials, the US merely plays into accusations it wants to create another “colour revolution” in Georgia, as Russia has claimed.
FOR BUSINESS. Fearing another Ukraine, the West has overreached in the Caucasus. Vocal support to Armenia in its conflict with Azerbaijan has alienated Baku while gaining little in Yerevan. A focus on human rights may end up winning fewer hearts and minds than the infrastructure built by Turkey and China, or the diplomacy of Russia and Iran. The Caucasus is economically small, but geographically vital for European energy supplies and aviation routes.