The US, China: Electric shock
Also: Iran, Greece, Turkey, Georgia, and Overseas France.
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UNITED STATES. CHINA. Electric shock
The trade war is about to get serious.
Janet Yellen said a strong Chinese response was "possible" amid reports the US would quadruple tariffs on Chinese electric vehicles Tuesday to 102.5%. New tariffs are also expected on solar equipment, chips, and medical devices.
INTELLIGENCE. After weeks of complaints from the US and EU about Chinese “overcapacity” and “excess supply” the tariffs won’t come as a surprise, but they are still designed to shock. Seeking to outflank Donald Trump, who has promised a 60% tariff on all Chinese goods, Joe Biden wants to go further on symbolic, high-profile products, like EVs, even if the US only imports limited quantities. It echoes a similar vow to block Japan’s purchase of US Steel.
FOR BUSINESS. Friend and foe alike can expect increased US protectionism in a close election year. No longer the bastion of free trade it was prior to 2016, the US is now leading a return to the trade blocs of the Cold War. This will mean China’s excess production will just flow elsewhere, hurting US exporters in turn. Chinese exports returned to growth in April. China has edged out the US as India's largest trading partner, according to a Delhi-based think tank.
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IRAN. Succession story
The IRGC raises the stakes again.
Washington urged Tehran to halt "unprecedented" arms transfers to Yemen Monday. Le Monde said Friday Iran was in talks to buy $56 million of uranium from Niger. A senior official said Thursday Iran could change its nuclear doctrine.
INTELLIGENCE. The risk of direct conflict with Israel has decreased in recent weeks but Iran’s Islamic Revolutionary Guard Corps have resumed their escalation with the West in other ways, both to deter future attacks against Iran and its proxies, and to solidify the organisation’s position in a looming war of succession when Supreme Leader Ali Khamenei, 85, shuffles off. IRGC-linked hardliners dominated the second round of parliamentary elections Friday.
FOR BUSINESS. In some ways the military-focussed Guards are less erratic than the Shiite clerics who have so far run the Islamic Republic. They are also seen as less bothered with the dress code and morality strictures that have brought young Iranians to the street. But a pseudo-secular pragmatism belies a hyper-nationalist worldview that could keep Iran isolated and belligerent long after the ayatollahs are gone, particularly if Tehran obtains nuclear weapons.
GREECE. TURKEY. Bigger fish to fry
Athens and Ankara shelve bilateral disagreements, for now.
Turkey's Recep Tayyip Erdogan hosted Kyriakos Mitsotakis in Ankara Monday, the first visit by a Greek prime minister in five years. The leaders agreed to disagree on Hamas and pursue "unprecedented heights" in bilateral relations.
INTELLIGENCE. Despite being longstanding NATO allies, ties between Athens and Ankara have been plagued by mutual distrust, including over Cyprus and the waters of the eastern Mediterranean. Regional shifts in recent years have, however, brought them closer together. Syria’s civil war forced cooperation on refugees. Covid-19 required pragmatism to lure tourists back. Turkey’s 2023 earthquake was a literal tipping point, with Greece leading aid efforts.
FOR BUSINESS.There are structural reasons to be optimistic, not least the prospect for a Turkey-based oil and gas pipeline network to enmesh the region. Yet energy diplomacy has, in the past, also split the Aegean. Previous bouts of ‘earthquake diplomacy’ have been quickly overrun by new disputes. With long memories and proud histories, Turkey and Greece use each other as a foil for domestic failings. Trade is a fraction of what it should ordinarily be.
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GEORGIA. Midnight train
Two types of foreign influence collide.
Protesters were dispersed early Tuesday ahead of a final reading of a bill requiring NGOs receiving 20% of funding overseas to register as foreign agents. Prime Minister Irakli Kobakhidze said a "silent majority" wanted the new laws.
INTELLIGENCE. Up to 50,000 marched in Tbilisi on the weekend, many waving EU flags. They see the legislation as a “Russian law” to limit Western influence. Many who support the measure want it for exactly this reason. The law will almost certainly pass and, as in many countries with similar legislation (including India and Australia), will quickly be forgotten. That said, it will complicate Georgia’s EU accession, even if this was always likely to be a long shot.
FOR BUSINESS. Surveys show 80% of Georgians want to join the EU, but this doesn’t mean they want all the West brings (a common sentiment in Eastern Europe). Nor does it mean they want to sever ties with Russia, which despite occupying 20% of Georgian territory is its second-largest trading partner, after Turkey. This is bolstered by a free trade deal and visa-free travel (something the EU also has) plus profitable sanctions-busting (which the EU doesn’t).
FRENCH OVERSEAS TERRITORIES. Ultramarine blues
Trouble in France’s outre-mer.
New Caledonia imposed a curfew in Noumea Tuesday after violent protests and an attempted prison mutiny. France's health minister visited Mayotte last week, as the Indian Ocean territory experienced a cholera outbreak with one death.
INTELLIGENCE. The violence in New Caledonia comes ahead of a vote in Paris to allow more French citizens to participate in local elections, further reducing the chances of independence, which has been defeated in three referendums but remains a cause for tensions in the nickel-rich Pacific territory. The outbreak in Mayotte has come via Comoros, another former colony that last month saw a major jail break and is a transit point for African refugees.
FOR BUSINESS. France is in no danger of losing its residual outposts, in the way its former possessions in the Sahel have turned to Russia, but Emmanuel Macron will be nervous about any impact on his “Indo-Pacific” legacy – a pillar of French claims to global leadership. And ahead of Olympic events in Tahiti and the torch relay in Noumea, among other offshore locations, he won’t want violence in a distant territory to detract from Paris’s message of renewal.