The Moon: As above, so below.
Also: Ukraine, Russia, China, the US, Iran, Australia and West Africa.
THE MOON. As above, so below.
Cold War-style competition enters a new lunar cycle.
Russia launched its first lunar mission in 47 years from Vostochny, in the far east, on Friday. On Tuesday, NASA’s administrator said China might occupy the Moon’s south pole “like the Spratly Islands” in the South China Sea.
INTELLIGENCE. Russia’s Luna-25 mission is both a symbol of defiance and resurgence. Though dismissed by NASA’s Bill Nelson, the Kremlin’s ability to launch such a complex undertaking during wartime speaks to technological reserves that sanctions are yet to break. It is also a propaganda victory as the war in Ukraine begins to turn in Russia's favour. Ukraine evacuated 12,000 civilians on Thursday as Russia looked set to recapture territory in eastern Kharkiv.
FOR BUSINESS. Days after an Indian probe entered lunar orbit, the space race is back, complete with tightening restrictions on technology exports and UFO hysteria. It also suggests that non-US capabilities are stronger than once thought. Congressional Republicans claim China's military budget is closer to $700 billion, rather than $292 billion, as usually cited. The World Bank estimates that Russia’s GDP now exceeds Germany’s in purchasing power terms.
UKRAINE. RUSSIA. Corridors of flour.
Kyiv seeks out new ways to export its grain.
Ukraine announced a Black Sea “humanitarian corridor” on Thursday for ships stuck in its ports since Russia’s invasion. The White House sent Congress a $24 billion funding request for Ukraine, including $14.1 billion in military aid.
INTELLIGENCE. Ukraine is trying new things, but the chances of failure are high. Ongoing supplies of Western military hardware look more assured for now, but these also have their limits. Congress has already approved $113 billion in spending for Ukraine and Republican sceptics are starting to push back, making comparisons to Hawaii’s $12 billion relief package. Success in Ukraine’s counter-offensive would help persuade funders, but this too is looking wobbly.
FOR BUSINESS. Insurers and shippers have cast doubt on Kyiv’s proposal, with Russian bombardments continuing. Unless Moscow returns to the UN-backed Black Sea Grain Initiative – which Turkish President Recep Tayyip Erdogan this week said requires concessions from the West – it is hard to see how Ukraine will safely export its harvests. In the meantime, traders have noticed a spate of grain silo fires elsewhere: Turkey on Monday; France on Thursday.
Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.
CHINA. UNITED STATES. A danger to the world?
The economy is slowing, but Beijing is not yet on its knees.
China was a “ticking time bomb” Joe Biden told supporters on Thursday and “that's not good because when bad folks have problems, they do bad things.” Major Chinese property developer Country Garden saw its shares fall 10% on Friday.
INTELLIGENCE. China’s slowdown is real, but it remains a formidable geopolitical force. Perceptions that it is being kicked when down will resonate in Beijing and elsewhere. China's debt levels are also generally misunderstood. Though aggregate figures are high, most are in local currency and linked to government accounts. And apart from developers like Country Garden, many private firms remain underleveraged (and cheap by market valuation).
FOR BUSINESS. Country Garden, China's biggest private homebuilder by sales, warned it could see a $7.6 billion loss in the first half. Shares have plunged amid speculation the firm missed interest repayments on several offshore bonds. Country Garden’s collapse could arguably have a bigger impact than the 2021 restructuring of fellow developer Evergrande. Yet it could also be the trigger for Beijing to finally unleash much-anticipated fiscal stimulus.
IRAN. UNITED STATES. Greasing the deals.
Oil and a diplomatic breakthrough.
The White House confirmed on Thursday that US citizens had been released by Iran as speculation mounted that Washington would soon approve the release of $6 billion of sanctioned Iranian assets held in South Korea.
INTELLIGENCE. Amid parallel attempts to strike an accord between Israel and Saudi Arabia, seeking a détente with Tehran is a much bigger challenge. As with an earlier deal that saw Iranian oil payments released from Iraq, the move is likely a one-off, rather than the start of a larger unwinding of sanctions. Yet it shows that deals can be made, even between implacable foes. Russia, China and North Korea, which have also detained US citizens, will be watching.
FOR BUSINESS. Earlier hopes of a “mini peace deal” seem unfounded, but if the US can allow Iran some breathing room, it may see more oil enter global markets and reduce tensions in the Gulf. The Biden Administration, however, will need to ensure this doesn’t unnecessarily bolster the Islamic Revolutionary Guard Corps, which is gaining in Tehran’s murky war of leadership succession, or unnecessarily annoy Israel or the House of Representatives.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
AUSTRALIA. Lucky for some.
An unlikely cause of global gas uncertainty.
European gas futures jumped 40% on Wednesday night – the biggest rise since Russia invaded Ukraine – after workers at three Australian plants threatened to strike. Woodside and Chevron held talks with unions on Thursday and Friday.
INTELLIGENCE. Australia’s offshore gas workers are some of the highest-paid people in one of the world’s highest-paid countries. But with centre-left governments in Canberra and most Australian states, the unions have an incentive to strike while the iron is hot. A deal will likely be reached, but it accentuates to some a growing sense of sovereign risk in what has traditionally been one of the world’s most predictable and business-friendly resource jurisdictions.
FOR BUSINESS. While spot prices were more muted, the sharp futures reaction shows how hydrocarbon markets are becoming more balanced after a period of under-investment. It also accentuates recent investor complaints. In July, Japanese firms said Australia was no longer seen as a trusted LNG supplier after new carbon policies were introduced. In February, BHP said it would pause investment in Queensland after the state suddenly lifted royalties.
WEST AFRICA. Military non-intervention.
A non-decision causes more regional uncertainty.
The Economic Community of West African States on Thursday ordered the “activation” of a “standby force” to “restore constitutional order” in Niger. Citizens in Senegal, which pledged troops, expressed misgivings to France24 reporters.
INTELLIGENCE. The statement was purposely vague and likely seeks a dignified way for ECOWAS to back down from earlier threats, led by Nigeria’s new president, to invade Niger and restore its government. But with the threat still somewhat on the table, tensions in the region are growing. And opposition goes beyond northern Nigeria, which shares ethnic ties with Niger. Several other ECOWAS states are themselves suffering from civil unrest and discord.
FOR BUSINESS. Besides undoing Nigeria’s nascent reforms, a regional conflict would harm Senegal, which has been under an internet blackout since the arrest of its opposition leader in June.Senegal is Francophone West Africa's second-largest economy after Côte d’Ivoire, the world's top cocoa exporter, and which has suffered two civil wars since 2002. Should either of these economies experience further strife, French influence in Africa would truly suffer.
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