Ukraine, Russia: Hitting the gas
Also: Vietnam, Thailand, Israel, Palestine, and Pakistan.
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UKRAINE. RUSSIA. Hitting the gas
A wake-up call for a neglected vulnerability.
Russia had targeted gas transit facilities to Europe in recent attacks, Volodymyr Zelensky said Saturday. Mulling potential European sanctions, Italy said Friday it would have no problems with a ban on Russian liquified natural gas.
INTELLIGENCE. Despite two years of war and countless lives, Europe still imports lots of Russian energy, even if it’s refined and re-exported via third countries. Indeed, Russian sales were up 23% in the first quarter due to the Red Sea crisis. Absurdly, some of this still comes directly through Ukrainian pipelines (and connects to storage bunkers there), but fresh attacks on energy infrastructure, and talk of EU LNG sanctions, could finally end a self-defeating trade.
FOR BUSINESS. Unwilling to trade reliance on Russian gas for US or Qatari LNG (or Chinese solar panels), many in Europe are reviving plans to expand their nuclear production. And buoyed by Russia’s decision to avoid attacking nuclear plants, Ukraine is planning four new reactors. Yet the irony is Russia remains the world’s top exporter of uranium, particularly in the wake of Niger’s coup, with a 40% share. Even the US purchased a record amount in 2023.
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VIETNAM. Hue and cry
A Leninist purge claims its next victim.
National Assembly Chairman Vuong Dinh Hue, Vietnam's fourth-highest official, resigned Friday over unspecified "shortcomings". Hue's deputy, Pham Thai Ha was arrested last week amid a probe into graft at an infrastructure firm.
INTELLIGENCE. Hue is the latest official to step down after ex-president Vo Van Thuong left his post in March. Thuong’s predecessor resigned a year earlier. Communist Party Secretary Nguyen Phu Trong, Vietnam's top official, is conducting a "blazing furnace" anti-graft campaign reminiscent of Xi Jinping's "tigers and flies" purge in China. A hardline apparatchik since 1968, Trong is part of a faction that wants Vietnam to move closer to Russia and China.
FOR BUSINESS. Blazing furnace also led to the jailing of a drinks tycoon Thursday and the death sentence of a property developer the week before. Firms are on notice that graft won’t be tolerated. Officials are on notice the capitalist free-for-all is over. The Philippines has since become the US’s closest ally in the South China Sea. Western firms wanting a China alternative are now considering Malaysia. Hanoi is building a high-speed line to southern China.
THAILAND. Vote of Thaksin
A China-friendly ex-prime minister looms behind a cabinet reshuffle.
Foreign Minister Parnpree Bahiddha-Nukara resigned Sunday after losing one of six deputy prime minister posts in a wide-ranging cabinet reshuffle. Bangkok approved a plan Tuesday to effectively remove the military's Senate veto.
INTELLIGENCE. Prime Minister Srettha Thavisin, a member of ex-prime minister Thaksin Shinawatra's Pheu Thai party, which regained government last year in elections marred by controversy, is slowly taking control from the military establishment. It mirrors Thaksin's rehabilitation with King Vajiralongkorn (Thaksin spent 15 years in self-imposed exile in part over lèse-majesté charges) and closer ties with Beijing, which many in the military had opposed.
FOR BUSINESS. Parnpree’s departure leaves Thailand without an envoy on Myanmar’s civil war, but the government was quick to say his duties would be given to officials. It’s less clear what it means for China or the economy, but the trend remains towards a more mercantilist approach. This includes an emphasis on mega-projects like the proposed Kra Canal, which would dissect Thailand’s restive south and allow Chinese ships to bypass the Malacca Strait.
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ISRAEL. PALESTINE. Everyone’s a hostage
The chance of a ceasefire narrows.
Oil prices fell Monday as last-ditch talks began in Cairo to secure a Gaza ceasefire. Joe Biden and Benjamin Netanyahu spoke Sunday. Israel agreed not to launch an assault on Rafah without first consulting the US, the White House said.
INTELLIGENCE. Planning continues for an assault and Israel can point to near-constant talks with Washington. Like Biden, wedged between competing domestic lobbies, Netanyahu will find it hard to back down without alienating his coalition partners or risking a repeat of October 7. As for Hamas, while it’s militarily on the ropes, it too has an incentive to keep the war going as China hosts talks with rival Fatah about forming a unitary Palestinian government
FOR BUSINESS. Antony Blinken is on his way to Israel again for crisis talks. His French counterpart is doing the same in Lebanon. But while a direct Israel-Iran conflict has been avoided, the war in Gaza looks set to continue. Qatar has hinted it is ready to give up its mediation role. Hamas is said to be considering a move to Istanbul. Anti-Israel campus protests are spreading outside the US, promising to make Gaza a domestic problem for even more governments.
PAKISTAN. Can’t be choosers
Islamabad is wedged between competing foes.
Pakistan met the IMF Sunday for a new loan when its current arrangement expires this week. Islamabad reversed a threat Friday to expel 3 million Afghans. Iran said Pakistan could be fined $18 billion for reneging on a gas deal.
INTELLIGENCE. Reliant on aid, next to volatile neighbours, with an unpopular government, and balancing ties with the US and China, Pakistan is constrained in its choices. It needs piped gas to reboot its economy, but Western pressure on Iran has made finalising a long-stalled project impossible. It needs to secure its borders after a spate of attacks but also mend ties with the Taliban. It needs to convince China it remains a good bet, even if the facts say otherwise.
FOR BUSINESS. Pakistan has a weak hand and, for the most part, has played it poorly. The military-backed government of Shehbaz Sharif is deemed more competent than that of jailed Imran Khan, but politics remain febrile. Its intelligence services have cultivated, in the name of countering India, the terrorists that now plague it and are vexing Islamabad’s backers in Beijing and Washington. Pakistan’s 24th IMF bailout, if granted, won’t likely be its last.