The US, China: Four hours to save the world.
Also: Taiwan, 'The Rock', Israel, Palestine and Iran.
UNITED STATES. CHINA. Four hours to save the world.
An overdue meeting causes relief on both sides of the Pacific.
Joe Biden and Xi Jinping met for four hours on Wednesday, in their first meeting in a year. They agreed to curb fentanyl production, open a presidential hotline, and resume military talks. Biden later said he still thought Xi was a “dictator”.
INTELLIGENCE. Biden and Xi largely agreed to disagree, but they proved limited cooperation is possible. The deal on fentanyl is welcome, though will be largely symbolic (and not just for San Francisco’s addicts). Enforcement will be difficult in China, where corruption is systemic. And while China, like for most goods, is the world’s biggest maker of precursor chemicals, cartels can find inputs elsewhere, as Colombia’s deputy police commander said on Wednesday.
FOR BUSINESS. The result would have been better had Biden not walked into a reporter’s trap by calling Xi a dictator, but holding the meeting was always the meeting’s chief aim after an otherwise bad year for bilateral ties. US investors had become wary of China, but may now creep back in, particularly on the back of Wednesday’s strong manufacturing and consumption data. Year-on-year factory output and retail sales rose 4.6% and 7.6% for October respectively.
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TAIWAN. CHINA. Danger diverted.
The ‘most dangerous issue’ in US-China relations needn’t be.
Xi Jinping told Joe Biden on Wednesday Taiwan was "the biggest, most dangerous issue" in their relations, a US official told reporters. Anti-independence parties in Taiwan agreed on Wednesday to compete as a joint ticket in January's vote.
INTELLIGENCE. Should Taiwan’s ruling Democratic Progressive Party be defeated next year, as now seems more possible, cross-strait tensions should dissipate for another electoral cycle. Xi still wants “reunification” and Taiwan's National Security Council said on Tuesday that Beijing may have the capability to force the issue in 2027, but for now the world’s problems are likely to be confined to other myriad hot spots (for instance, the South China Sea).
FOR BUSINESS. The structural conditions for eventual conflict remain, but it is in neither China’s nor the West’s interests to precipitate a war in Taiwan, which would be cataclysmic for the entire world. Xi once said he does not want to pass the cross-strait “problem” to the next generation, but strategists hope the conditions for a stable status quo can outlast his political life. The Taiwan Stock Exchange weighted index hit a four-month high on Thursday.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
UNITED STATES. POLITICS. Into the ring.
Republicans are in trouble if you smell what The Rock is cooking.
Former pro-wrestler Dwayne 'The Rock' Johnson was spotted with senior Democrats on Wednesday after hinting at a presidential run on Monday. Republican congressmen allegedly brawled on Tuesday as a senator threatened a witness.
INTELLIGENCE. Fuses are short on the right after House Speaker Mike Johnson (no relation) surprised colleagues by passing stopgap funding. It’s as good a time as any for Trump's ex-cable TV sparring partner to enter the fray. The Rock has long hinted at politics, but a Beltway joke became more real this week with a stage-managed sequence of events, ranging from a late-night talk show appearance to a semi-serious endorsement by the Washington Post.
FOR BUSINESS. Allegedly 46% of Americans would vote for The Rock, who appeals to populists and progressives alike. But becoming a Democrat Schwarzenegger would mean ousting a sitting president with the support of party grandees, who have so far shunned contenders. Despite the Republicans’ turmoil, Biden’s unpopularity offers Trump a path to victory. This may be the real reason Mike Johnson is considering to not proceed with a Biden impeachment.
ISRAEL. PALESTINE. Hospital pass.
The IDF can prove Hamas uses civilians but will still face censure.
Israeli troops re-entered Gaza’s main hospital on Thursday after releasing evidence of Hamas weapons caches and human shield tactics. Israel has faced pressure over its strikes on the facility, which shelters thousands of civilians.
INTELLIGENCE. The point of hiding among civilians is that you make your enemy look as bad as you. Israel knows it has fallen into this trap, but for now its security imperatives remain foremost. The balance between military aims and humanitarian considerations, however, will soon flip, particularly as Qatar and the US hint at a hostage breakthrough. Finding a way to quickly end the assault, while minimising the chance of Hamas reprisals, is getting more urgent.
FOR BUSINESS. Work is afoot for ‘the day after’. While plans for Gaza’s future are in flux, within Israel, members of Benjamin Netanyahu’s Likud party are reportedly preparing for his ousting. This will be the first task before regional rapprochement can begin. For now, this looks a long-term prospect. Turkey’s president on Wednesday labelled Israel a “terror state”. But allegiances can shift fast in the Middle East and Israel’s economy still has lots to offer the region.
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IRAN. In a spin.
The UN accuses Tehran of backsliding on its nuclear obligations.
A report by the International Atomic Energy Agency on Wednesday suggested Iran had enriched enough uranium for three atomic bombs. Nobel laureate and human rights lawyer Nasrin Satoudeh was released following a hunger strike.
INTELLIGENCE. The IAEA estimates Iran has stockpiled close to 22 times the limit of enriched uranium as defined in the 2015 deal, which eased sanctions at the time. It follows Iran’s withdrawal of accreditation for IAEA inspectors in September. Meanwhile, its human rights record remains bleak. Notwithstanding Satoudeh’s high-profile release, some Iran has executed 664 people so far this year, according to international NGOs, with little to no scrutiny.
FOR BUSINESS. Iran is playing two delicate balancing acts. It openly supports Hamas and Hezbollah but has no desire to see the conflict expand into a regional war, which would be disastrous for its increasingly unpopular regime. Gulf states have rejected Iran’s calls for them to sever ties with Israel. With its weapons program, Iran needs to maintain enough fuel for strategic deterrence, but not so much it is deemed an imminent threat by Israel or the US.