The US, Ukraine: Playing chicken with Kyiv.
Also: Slovakia, Maldives, North Korea, China, the Caucasus and Central Asia.
UNITED STATES. UKRAINE. Playing chicken with Kyiv.
A shutdown is averted but at Zelensky's expense.
Speaker Kevin McCarthy joined Congressional Democrats to pass a stopgap funding bill on Saturday, quickly agreed by the Senate and White House. Hardline Republicans who opposed the bill have since threatened to remove McCarthy.
INTELLIGENCE. Media reports framed MAGA Republicans as the biggest losers from the last-minute spending deal, but by pushing negotiations to the wire, hardliners upended US strategy by cutting new funding to Ukraine. The White House hopes that before the 45-day funding extension expires a new deal for Kyiv will be found, but Congress has revealed its preferences: cuts to Ukraine were easier to agree than changes to domestic or border policies.
FOR BUSINESS. While politicians panicked, many investors ignored the negotiations, focusing instead on interest rates. But Congressional brinkmanship is destabilising the business environment and US foreign policy. It also makes clear to US adversaries that they can extract the greatest concessions by timing their moves with the US political cycle. As the 2024 election nears, geopolitical tensions can be expected to coincide with key decisions in Washington.
Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.
SLOVAKIA. UKRAINE. Fico scores.
A Russia-friendly government is set to begin.
Populist former prime minister Robert Fico was expected to be asked to form government on Monday, having won 22.9% of votes on Saturday in a tight election race. Fico's socialist Smer party campaigned on an anti-war platform.
INTELLIGENCE. Though from the left, Fico’s win was celebrated by the far-right in Hungary, Germany and elsewhere as another sign the West’s consensus on Ukraine is breaking down. Brussels is yet to comment, but last week warned the elections were a “test case” of Russian disinformation. The EU’s chief diplomat visited Ukraine on the weekend, promising increased aid from the bloc. Volodymyr Zelensky on Sunday said “nothing” would break Kyiv’s resolve.
FOR BUSINESS. Fico will need a coalition to govern but should face few obstacles. The EU will need to reckon with populism’s growing appeal as its leaders bicker over border controls and a slowing economy. With a population of 5.4 million, Slovakia is small, but is a major node in Europe's car industry and a key voice in Central Europe’s Visegrad Group, which is enjoying an outsized voice on EU policy. Its largest member, Poland, goes to the polls on 15 October.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
MALDIVES. Chinese revolution.
A pro-China candidate wins the presidency.
Opposition leader Mohamed Muizzu won Maldives' presidential runoff on Saturday, defeating Ibrahim Solih with 54% of the vote. Former president Abdulla Yameen, a mentor of Muizzu, was moved from prison to house arrest on Sunday.
INTELLIGENCE. Muizzu won on his credentials as the mayor of the capital, Malé, but elsewhere his election was seen as a victory for Beijing, with Muizzu’s party’s longstanding anti-India platform. The switch will make Delhi nervous amid other developments along its periphery. Nepal’s prime minister last week visited Beijing. China is negotiating a border treaty with Bhutan. Violence continues in Manipur and Kashmir, next to Myanmar and Pakistan respectively.
FOR BUSINESS. With Maldives’ straddling vital shipping lanes, China has reportedly eyed a base there, but attempts to establish a foothold in neighbouring Sri Lanka only led to constitutional crisis and it is unclear whether Beijing will bother again at risk of harming a recent thaw in relations with Delhi. Muizzu is otherwise expected to resume a path of construction-led growth, while Delhi calibrates what has been seen as an increasingly aggressive foreign policy.
NORTH KOREA. CHINA. King’s ransom.
Beijing seemingly brokers the return of a US soldier.
Private Travis King was in a “reintegration program” in Texas, the Pentagon said on Thursday, after being released from North Korea via China. Senior US and Chinese diplomats met in Washington on Thursday, the latest in a series of talks..
INTELLIGENCE. China seldom grants the US favours for free, so its role in King’s release is noteworthy amid hot-and-cold signals on both sides. Beijing is reportedly confused over the disconnect between hawks in Washington’s security establishment and doves in the trade community. A summit between Xi Jinping and Joe Biden would sort this out, but Xi will be reluctant to visit the US for November’s APEC meetings unless he is guaranteed a breakthrough.
FOR BUSINESS. Though engaged in a military build-up and a war of words over disinformation, China wants to make nice with the US to stabilise its economy. While reporting on China’s property market is overblown, and consumer data has rebounded, weaker trade and investment has economists worried. The World Bank on Monday cut its forecast for China's 2024 growth to 4.4%. Overall, it expects growth in Asia to be at its slowest pace since the 1960s.
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THE CAUCASUS. CENTRAL ASIA. Caught in the middle.
As ethnic Armenians flee, transport plans are dusted off.
A UN mission arrived in Nagorno-Karabakh on Saturday after 80% of the region’s population fled to Armenia. Germany and Central Asian states called for a “Middle Corridor” infrastructure route on Friday, connecting the region to Europe.
INTELLIGENCE. The UN, kept out of Karabakh for 30 years, has found no evidence of ethnic cleansing, but the enclave’s residents are taking no chances as Russia, Turkey and Azerbaijan have seemingly aligned against Armenia following Yerevan’s brief flirtations with Europe and the US. But as with neighbouring Georgia, hopes for Western support may prove hollow with Germany signalling a greater interest in a connectivity project proposed by Baku.
FOR BUSINESS. The Middle Corridor aims to link Central Asia to Europe via Azerbaijan and Turkey, bypassing Russia. Moscow, however, is willing to condone it, should it assist in rerouting its own sanctioned trade, and should it solidify support in Baku for Moscow’s own North-South Transport Corridor to India via Iran. Armenia could play spoiler – as it could for airlines that cross its territory to avoid Russia – but, increasingly isolated, it won’t likely take the risk.