The US: Mugged by reality.
Also: the BRICS, India, China, Pakistan, Japan and Europe.
UNITED STATES. Mugged by reality.
Legal woes will energise or end Trump’s campaign.
Donald Trump was booked with more than a dozen criminal charges at an Atlanta jail on Thursday. The former president later posted his mugshot and the words “ELECTION INTERFERENCE NEVER SURRENDER!” to social media platform X.
INTELLIGENCE. Trump’s criminal indictments have so far solidified support among the Republican base, but rather than turning him into a martyr, his legal woes have become a turn-off for swing voters. Most recently, reactions to his Fulton County mug shot have become a Rorschach test for a polarised country. But Trump might not care – his first priority is to secure the primary, and throughout his career, he has proven that offence is the best form of defence.
FOR BUSINESS. Polls show Trump and Biden neck and neck, but betting markets and professional forecasters estimate Biden's chances as being up to 20 points greater. Such calculations are of course guesswork at this stage of the election cycle, but they serve to remind that while Trump dominates the media – and Biden may look increasingly ineffective – there are plenty of hurdles ahead, legal and political, for a man many Americans can’t stand.
BRICS. Ocean’s eleven.
A China-dominated group expands.
Leaders of the BRICS club of emerging economies announced in Johannesburg on Thursday that six new countries would join the group at the start of 2024: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
INTELLIGENCE. The group’s expansion provides symbolic heft at the expense of strategic coherence. Already an unusual gathering of often non-likeminded parties, the BRICS has just gotten stranger, uniting Ethiopia (with a GDP per capita of $925) with the UAE ($44,315). Where there is a political or economic logic, however, it’s in a desire to express non-alignment with the West, even if some, like Saudi Arabia, are technically US allies.
FOR BUSINESS. What will worry Washington about the BRICS is the inclusion of three energy heavyweights. While talk of a BRICS currency is premature, should the group ever hope to truly de-dollarise trade it will need the help of oil exporters, who earn the majority of their current revenues in greenbacks. Vladimir Putin spoke of this aim during his video address to the BRICS but was undoubtedly talking his book. The ruble continues to hover near post-2022 lows.
Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.
INDIA. CHINA. Moving mountains.
Beijing and Delhi approach a border deal.
On the sidelines of the BRICS Summit, Xi Jinping and Narendra Modi agreed on Thursday to intensify efforts at disengagement and de-escalation along the Sino-Indian frontier. Xi and Modi are expected to meet again in New Delhi.
INTELLIGENCE. Before leaders meet again at the G20, Delhi and Beijing will have much to do on normalising relations. Despite decades of talks, skirmishes and disagreements, the Line of Actual Control, which serves as the de facto Himalayan border, has eluded formal demarcation. China has resolved border disputes with all its land neighbours bar India and Bhutan, for which disagreements date back to the days of colonial India and an independent Tibet.
FOR BUSINESS. Should India and China reach a deal it would be of enormous mutual economic benefit. Hawks on both sides (not to mention Pakistan and the US) will be wary, but Russia and other BRICS members would welcome it. For Modi, after years of anti-Chinese jingoism, cutting a deal will come at political cost, but he might be of a mind to reduce border tariffs and boost inflation-busting Chinese imports as consumer prices hit new post-COVID highs.
PAKISTAN. CHINA. Pathbreaking.
Neither snow nor rain nor terrorism stays the Belt and Road.
China has sent Pakistan its first shipments under the TIR (Transports Internationaux Routiers) Convention, state media said on Wednesday. Trucks departed Kashgar in Xinjiang, heading to Islamabad via the 4,693-metre Khunjerab Pass.
INTELLIGENCE. India blocked Pakistan’s membership in the BRICS so China is finding other ways to show its traditional partner that it still counts. It remains to be seen how much return Beijing will get on its investment. In the short term, Pakistan’s prospects are grim, with insurgencies, inflation and civil unrest. In the long term, however, it affords strategic geography and access to the Indian Ocean. And that appears to be the point of the Belt and Road.
FOR BUSINESS. While it eyes a détente with Delhi, Beijing wants to keep Islamabad close. The opening of a commercial land link will help – and the infrastructure is impressive – but the economics of the Karakoram Highway are yet to become apparent. The security challenges are also vast. Not only have Chinese projects in Pakistan’s south literally come under fire, but militants near the Indian and Afghan borders have endangered investments in the north.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
JAPAN. CHINA. No thanks for all the fish.
Beijing releases a nuclear red herring.
China banned all imports of Japanese seafood on Thursday after Tokyo began releasing water from the Fukushima nuclear plant into the Pacific. The move was a ratcheting of existing restrictions on goods from the Fukushima region.
INTELLIGENCE. The water has been deemed safe by the UN’s nuclear watchdog. And China, with a history of safety scandals, is a dubious defender of food standards. But hypocrisy never got in the way of diplomatic messaging. In the wake of recent tech restrictions and a trilateral meeting with the US and South Korea, Beijing wants to express its displeasure with Tokyo. As proven in the past and elsewhere, boycotts and trade bans are an effective policy tool.
FOR BUSINESS. Together with Hong Kong, China is Japan's biggest seafood market, with $600 million in exports last year. Beijing’s ban is unlikely to make Tokyo yield in the short term, but it is stirring up domestic anxiety in Japan. The only country to have been attacked by atomic weapons, Japan has a strong anti-nuclear lobby. It also has a strong anti-military lobby, which is complicating deeper US cooperation. China will hope it is shooting fish in a barrel.
EUROPE. INTERNET. Flexing Brussels.
The EU’s muscular tech regulations begin.
The Digital Services Act entered into force on Friday, obliging internet platforms with over 45 million European users to prevent harmful content and limit user-targeting among other measures. The law will apply to smaller firms in February.
INTELLIGENCE. The DSA is the latest legal flex from the EU, which has made up for its lack of a world-leading tech sector with a world-leading regulatory regime. Firms in breach of the DSA could be fined up to 6% of their global turnover, which in the case of firms like Alphabet could hypothetically be in the region of $17 billion. Most firms are unlikely ready for the new regulations, and it is hard to see how the EU will enforce the rules without judicial challenge.
FOR BUSINESS. Some in the industry are fighting back. Amazon is contesting its inclusion in the courts. Others are wary of attracting further regulatory ire. The EU is preparing more rules, including the AI Act and the Digital Markets Act. As part of a growing ‘techlash’ to dominant firms, jurisdictions from Canada to Australia are cracking down on long-established practices in the more laissez-faire Silicon Valley. The worst for the tech giants may be yet to come.
Emailed each weekday at 5am Eastern (9am GMT), Daily Assessment gives you the strategic framing and situational awareness to stay ahead in a changing world.
Excellent & most valuable folks !
On your last item, it appears Apple is about to cave on one EU demand & on its iPhone 15 launching in September, replace its charging port on all its devices sold everywhere with the universal port Europe is demanding…. which will only hit consumers hardest having to replace all their cords !!