The US: Superpower outage.
Also: the EU, Ukraine, terrorism, migration, Venezuela, and Guyana.
This is our last weekday dispatch for 2023. We’ll return to our daily schedule on 8 January otherwise stay tuned for our regular Not in Dispatches feature tomorrow.
UNITED STATES. Superpower outage.
Congress adjourns with unfinished business.
Congress passed the annual National Defense Authorization Act on Thursday, approving $886 billion in funds, including a 5.2% pay raise for personnel. While the NDAA included $300 million for Ukraine, a $61 billion package failed to pass.
INTELLIGENCE. The NDAA included compromises on abortion, transgender health, and surveillance, but the House majority won’t fold on Ukraine unless the Senate – agreeing to meet next week – can do a deal on border security. And complicating any residual bipartisanship will be impeachment hearings on Joe Biden, which the House opened on Wednesday, and a subpoena on his son Hunter, who may now also face contempt of Congress charges.
FOR BUSINESS. It's been a bad year for the 118th Congress – the least productive legislature since 1932. Next year could be worse, with the noise of elections, further eroding Washington’s reputation in foreign capitals. Irrespective of the merits of funding Ukraine, which faces an uphill fight either way, a lack of US support will be given as evidence of US decline. And while the US remains preeminent, in global affairs it’s perception that matters as much as reality.
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EUROPE. UKRAINE. Consolation prize.
EU membership talks won’t win the war.
EU leaders on Thursday agreed to accession talks with Ukraine but Hungary blocked a €50 billion aid package. Dutch leader Mark Rutte said he was confident of a funding deal in January. Accession talks will also be opened with Moldova.
INTELLIGENCE. The chance of EU membership allows Volodymr Zelensky to claim victory, but even if accession offered security – which it doesn’t – the process could take years. Talks with Serbia began in 2014; Montenegro in 2012. Further aid is meanwhile unlikely. Hungary’s objections haven’t been swayed by the release of €10 billion in frozen funds. And Viktor Orban will feel he has already gone out on a limb by abstaining from the accession decision.
FOR BUSINESS. Many EU leaders are quietly confident the talks will only be symbolic. Just 35% of European voters are in favour of enlarging the bloc. Ukraine’s membership could entitle it to an estimated €186 billion in integration funds and reduce EU-wide farm subsidies by around 20%. Vladimir Putin, in a revived annual press conference, has meanwhile warned the war will continue unless Kyiv sues for peace, adding he might also seize the city of Odesa.
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EUROPE. TERRORISM. Going to extremes.
Alleged Hamas plots will only harm Palestine, and Iran.
Denmark, Germany and the Netherlands on Thursday announced the arrest of four suspected Hamas members over planned attacks on Jews in Europe. Germany's domestic spy agency warned last month of an increased threat level.
INTELLIGENCE. With sporadic attacks already carried out in France, Belgium and elsewhere, authorities are on the highest alert in years. Hamas is unlikely to have the intent for mass terror on European soil as had ISIS or Al-Qaeda. This would only destroy any nascent sympathy it has received since Israel began its assault on Gaza. But European governments will see any attack on Jewish citizens as an attack on all citizens, which would have a similar effect.
FOR BUSINESS. Attacks in Europe would not be unprecedented and even the prospect of attacks could drive down confidence in the security of public venues, or curtail tourism to certain destinations. Palestinian groups conducted atrocities in the 1970s and 80s. Hamas supported an insurgency in Sinai until January. Yet beyond the current strikes in Lebanon, Yemen and Iraq, a Hamas campaign in Europe would be a risky escalation for Hamas’s Iranian backers.
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EUROPE. MIGRATION. Back to the wall.
Border policy remains the EU’s most contentious issue.
Finland closed its border with Russia on Friday, a day after reopening, due to a migrant influx. Cyprus warned Thursday of record Syrian refugees. Albania's constitutional court on Wednesday blocked an asylum application deal with Italy.
INTELLIGENCE. Migration is vexing politicians in the US, the UK and Australia, but in the EU – where border policies are made in Brussels – the problem seems intractable, leading to voters seeking extreme alternatives. And footage of uncontrolled arrivals, from the Arctic to the Canaries, are adding to concerns over ethnic tensions and domestic security. A proposed EU border package has meanwhile been panned by NGOs for discrimination and racial profiling.
FOR BUSINESS. As an EU-wide arrangement is sought, individual states are taking matters into their own hands, yet with not much luck. The left and right united to oppose Emmanuel Macron's migration bill on Monday. New rules in Dublin to slash welfare rates have failed to curb popular unrest. Germany's opposition has presented an overhaul of asylum laws as dissatisfaction with the ruling coalition rises to 82%, potentially complicating a new budget deal.
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VENEZUELA. GUYANA. Peace in Caribbean time.
Every little thing is going to be alright. Maybe.
The Presidents of Venezuela and Guyana agreed late Thursday to not threaten or use force, as well as refrain from escalation. Talks on a gas field between Shell and Venezuela's state oil firm broke down on Thursday, Reuters said.
INTELLIGENCE. The outcome in Saint Vincent is a victory for regional diplomats but may prove fleeting if Caracas feels the need to again distract its citizens. Similarly, should Nicolas Maduro see any casus belli from his often voluble neighbour – Guyana’s Mohamed Irfaan Ali called Maduro an “outlaw” on Wednesday – the escalation will resume. For now, Maduro probably has the crisis where he wants it: at a point where leverage is possible, but sanctions aren’t.
FOR BUSINESS. Oil firms in both countries are pretending to ignore the situation but exit strategies are no doubt being formed. Cancelling projects or talks on technicalities avoids political complication. Force majeure cannot be invoked before a war, and in any case, a war now cannot be described as unforeseen. One player, Chevron, has the added complication of being recently hit with an FTC inquiry into its acquisition of Hess, which has fields in Guyana.