The US, Israel, Ukraine: Arsenal of mediocrity
Also: the EU, Russia, North Macedonia, Cambodia, and China.
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UNITED STATES. ISRAEL. UKRAINE. Arsenal of mediocrity
Weapons pauses say as much about production as policy.
The US had paused a shipment of bombs and was reviewing further assistance, officials said Wednesday, linking the decision to Israel's entry into Rafah. Russia launched its largest missile barrage in weeks, damaging Ukraine's grid.
INTELLIGENCE. Ukraine’s lack of defences needs more than just money or Congress to fix. The West has the world’s best military technology, but cutting-edge equipment is not being sent to Ukraine and basic production of things like artillery shells has atrophied since 1991 – a consequence of insurgency-focussed wars and commercial logic. Even if the US was happy to give Israel more arms, there are limits to supplies that have already been promised to Ukraine.
FOR BUSINESS. US best-case production rates of 155mm shells won't reach 100,000 units per month until late 2025. Russia is already producing three times that. The bombs meant for Israel – 2,000-pound Vietnam-era ‘dumb’ bombs – aren’t in such short supply, but they need Joint Direct Attack Munition kits to improve precision. Israel used 6,000 of the kits in the first week of the Gaza war. For supplier Boeing, that’s around seven months of current production.
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UNITED STATES. Court jesters
Judicial politicisation, once tragedy, is now farce.
Porn actress Stormy Daniels gave testimony in New York Tuesday on a 2006 sexual encounter with Donald Trump. The former president's classified documents trial in Florida was indefinitely postponed, having been scheduled for 20 May.
INTELLIGENCE. Courtrooms are no stranger to muck but seldom has this been so central to US democracy. With popular approval of the Supreme Court now at just 41%, and the roles of attorneys-general and public prosecutor seen as largely partisan, verdicts are now increasingly seen contestable, if not rigged. The rulings on Trump were never going to be respected by half the electorate. Any abnormalities with their processes will add to the cynicism.
FOR BUSINESS. Institutional trust is a predictor of economic stability. The US isn’t heading for a cliff, irrespective of where the courts go (or who ends up in the White House) but sleaze has a corrosive effect, including on international reputation. Wednesday's Democracy Perception Index bears this out. While a net 22% of the world has a favourable perception of the US, this is down from 27% last year. Perceptions on Russia and China are much lower but rising.
EUROPE. RUSSIA. The all-clear
Brussels makes another incremental move against Moscow.
EU ambassadors agreed Wednesday to use the profits from frozen Russian central bank assets to aid Ukraine's defence. Euroclear, which holds most of the assets, would also reduce its management fees to free up more funds.
INTELLIGENCE. The decision will enliven Russian threats to seize European assets (or at least those not already expropriated) but will only yield €3 billion this year and maybe €15 billion at most. Parallel discussions to halt Russian LNG sales could have a bigger impact. Gazprom has already experienced its first annual loss in two decades. Unlike oil, Russian gas has been harder to shift since European pipelines closed. New pipes to China are not yet complete.
FOR BUSINESS. Key EU capitals had opposed the seizure, but it became inevitable after the US did the same last month. Hints from Emmanuel Macron about sending troops to Ukraine (now backed by Lithuania) gave a further wedge. Still, it’s not without risk. Euroclear is a major venue for non-US holders of Treasurys. The move could erode Europe’s role in global financial flows, ceding space for less principled intermediaries like Hong Kong and the UAE.
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NORTH MACEDONIA. Name and shame
Skopje’s new government could slow EU accession.
The VMRO-DPMNE party received 42% of 72% votes counted Wednesday night to the government's 14%, in a dramatic swing in Macedonia's parliamentary elections. The VMRO’s presidential candidate comfortably won the second round.
INTELLIGENCE. The right-wing party is broadly pro-European but could slow accession and give Russia a wedge considering its stronger stance on symbolic issues like the country’s name, and even the nationality of Alexander the Great (d.323 BC). These positions had been previously opposed by Greece, which holds an EU veto, and Bulgaria, which considers Macedonian a dialect. Many in Serbia and Albania also have questions on Macedonian nationhood.
FOR BUSINESS. The symbols of a small and demographically vulnerable state may seem petty in an era of great power competition (and bloodless EU technocracy) but the details could have an outsized impact, particularly amid other ethno-nationalist disputes in neighbouring Kosovo and Serbia, not to mention the conservative swing slightly to the north in Croatia, whose new government was forced to form a coalition with the hard-right on Wednesday.
CAMBODIA. CHINA. Khmer ruse
Beijing is interested in more than just tourism.
Phnom Penh hit back Wednesday at a US think tank report on the permanent basing of two Chinese corvettes at the Ream Naval Base. Cambodia approved a $1.7 billion Chinese-funded canal connecting the Mekong to the coast.
INTELLIGENCE. Western capitals have consistently raised concerns for years over evidence of Chinese activities at Ream, which Cambodia has consistently denied. They now have the so-called Funan Techo canal to worry about, which could in theory give China riverine access to the Cambodian coast without needing to transit the Mekong delta in Vietnam. The canal and base are close to Sihanoukville, a hub for Chinese tourism, gaming, and organised crime.
FOR BUSINESS. Since long-term prime minister Hun Sen passed leadership to his son in 2023, Cambodia has shifted slightly to the West but Chinese influence runs deep; a legacy of ancient ties, accentuated by the Khmer Rouge in the 1970s. Alongside Laos to the north, which abuts the rest of the Mekong before it hits Yunnan, Cambodia remains China’s closest Southeast Asian ally, routinely opposing Vietnam and others on issues like the South China Sea.