Ukraine, Russia: All stretched on the northern front
Also: Israel, Palestine, Spain, Brazil, and geomagnetic storms.
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UKRAINE. RUSSIA. All stretched on the northern front
As in previous wars, Moscow aims to outstretch and outlast its enemy.
Russian troops were on the outskirts of the city of Vovchansk, Ukraine said Sunday, after opening a new front Friday in the northern region of Kharkiv. Russian Defence Minister Sergei Shoigu was replaced Sunday after 10 years in the role.
INTELLIGENCE. Moscow’s gains in Kharkiv have been minimal but the new front has diverted Kyiv’s troops from Donetsk and displayed the permeability of border defences. After the arrest of his deputy last month, Shoigu’s replacement has been portrayed in the West as a sacking, but the Putin ally has in fact been promoted to head Russia’s Security Council, a more senior position. The fate of the council’s incumbent, Nikolai Patrushev, is unknown.
FOR BUSINESS. The new defence minister, Andrei Belousov, is an economist. His appointment makes sense in the context that the war in Ukraine is one of attrition, not manoeuvre. Belousov moreover is an architect of Russia’s economic resilience and an advocate for technological improvement, particularly in drone warfare, where Ukraine has come closest to parity. Kyiv, meanwhile, is edging toward full mobilisation, including of certain types of prisoners.
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ISRAEL. PALESTINE. Spoiling the ballot
Allied views on Gaza get even more incoherent.
The UN General Assembly voted 143-9, with 25 abstentions, Friday to recommend Palestinian membership. The US said it would veto any such request. Israel came second in the Eurovision 2024 televote, beating jury winner Switzerland.
INTELLIGENCE. The UNGA outcome was no surprise but there were subtle shifts from the previous such vote in 2012, like Australia and Poland, who voted in favour, and Switzerland, Sweden, and Finland, who went the other way. This reflects domestic politics, but also a weaker resolve in the US, which typically tries to corral its allies. The Eurovision vote, while unscientific, meanwhile suggests a stronger public sympathy for Israel than is usually taken for granted.
FOR BUSINESS. Eurovision, let alone the UN, won’t decide Gaza’s fate but popular opinion, real or perceived, is driving US policy to a greater extent than at any time since the 1960s, when the war epic Exodus led John F Kennedy to create the alliance. There otherwise seems to be little clarity to White House positions, which is leading to vacillation among allies. Egypt is but the latest, joining South Africa’s case against Israel on Sunday at the International Court of Justice.
SPAIN. Catalan whiskers
Pedro Sanchez has a rare almost-victory.
Spain's ruling Socialists received a 5% swing in Catalonia's elections Sunday, taking 42 seats and the top spot in parliament. The Republican Left of Catalonia (ERC), which led the region’s previous government, only received 20 seats.
INTELLIGENCE. The result is being seen as a victory for an embattled Pedro Sanchez in Madrid but could see the Catalan affiliate of his national coalition partner Sumar, which suffered a mild swing against it, join a reduced Catalan pro-independence government. Together, the pro-secessionist parties have a clearer path to leadership than the Socialists, who would need to ally with the national opposition People's Party, or tie up with one of the separatists.
FOR BUSINESS. The ERC was hammered but other separatists, like the centre-right Junts, did well. A new far-right separatist party, the Catalan Alliance, gained two seats. The biggest winner in percentage terms was the conservative People's Party, going from three to 12 seats, which augurs well for its national and European Union campaigns. Pedro, meanwhile, will continue to govern with the slimmest of margins. He at least won’t face more elections until 2026.
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BRAZIL. After the deluge
Lula has an opportunity to unite a divided country.
President Luiz Inacio Lula da Silva announced $2.3 billion in emergency spending Saturday as flood levels continued to rise across Rio Grande do Sul state after days of heavy rainfall. The death toll rose to 143 Sunday, with 125 missing.
INTELLIGENCE. The floods have been called Brazil’s worst since the same region flooded in 1941, but, so far at least, the death toll has been lower than 2022’s floods and mudslides in Rio de Janeiro state. Many are nonetheless describing this as Lula’s ‘Hurricane Katrina’, when 1,836 died in New Orleans in 2005. Rio Grande do Sul is an opposition stronghold. It is predominantly white. Jair Bolsonaro received 56.4% of its second-round votes in 2022.
FOR BUSINESS. The speed and strength of Lula’s response could be a circuit-breaker for Brazil’s polarisation. The G20 host has a good story to sell – recent reforms to the tax code are historic and could unlock a new era of growth – but the outlooked has been clouded by divisive political rhetoric, including from Bolsonaro and newfound allies like Elon Musk. The OECD expects growth of 1.9% this year, but damage to Rio Grande’s soybean sector could hurt this.
SOLAR STORMS. The sunny side
Modern technology shows its resilience.
Northern lights were seen as south as Florida on the weekend, while the Aurora Australis was seen as north as Namibia, due to the strongest geomagnetic storm in 21 years. Elon Musk said some Starlink satellite services were "degraded".
INTELLIGENCE. The event had a disturbance storm time (Dst) index of -412, similar to levels during a 2003 storm. By contrast, an event in 1989 had a Dst of -589 and one in 1859 between -800 and -1750. The good news is that utilities and satellite operators were better prepared this time around. Whereas 1989 caused power outages across Canada, no such interruptions were seen this year. GPS signals were degraded but satellite damage was less than in 2003.
FOR BUSINESS. The bad news is that an 1859-level “Carrington event” (so named after its discoverer) is inevitable at some point. If a Carrington happened today, Lloyds estimates it could cost the US as much as between 3 and 15% of GDP. Better preparations may lower that cost, but even Carrington events aren’t unusual on geological timescales. By examining carbon-14 levels found in tree-rings, scientists estimate an event in 774 was around ten times worse.