United States, Russia: My enemy’s friends
Also: the Arctic, Serbia, Israel, Colombia, and student protests.
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UNITED STATES. RUSSIA. My enemy’s friends
Fresh sanctions will hasten a splintering of supply chains.
Washington announced Wednesday a ban on Russian uranium and sanctions on global firms accused of helping Moscow source dual-use goods. New laws will also release $2.7 billion in funding for domestic uranium production.
INTELLIGENCE. The uranium ban was proposed by the House last year and comes as little surprise. It will, however, put more pressure on other buyers to do the same. The new sanctions would likewise have also come as no surprise to many of the firms targeted. Companies still trading with Russia at this stage of the war generally know what they’re doing. The sanctions, if anything, will cement their ties to the Russian market and break off links with the West.
FOR BUSINESS. A parallel network of banks and suppliers is emerging to service the markets increasingly isolated from the US and its allies. Following in the footsteps of the “teapot” refiners that distil Russian crude, and the shadow fleet of vessels that ship it, these supply chains are likely to expand in the coming years, helped by a proposed BRICS payments architecture. Economies that straddle these worlds, like the UAE, will see as many opportunities as risks.
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THE ARCTIC. Warming up
Edging for influence at the edge of the world.
The House of Representatives Wednesday approved legislation 214-199 to reinstate rights to drill in Alaska's Arctic National Wildlife Refuge. Russia activated its Arktika-M observation satellite system Sunday, the first for the region.
INTELLIGENCE. As sea ice minimums retreat, opening up the Arctic for more of the year, the region’s strategic and economic significance has increased. Moscow and Washington are positioning themselves in subtle ways. Russia is building new Orthodox churches in Novaya Zemlya. The US last year reopened a Cold War diplomatic post in Norway’s Tromsoe. This year’s step to revive drilling in Alaska could support moves for a greater presence in the Bering Strait.
FOR BUSINESS. The Northern Sea Route has grown in importance thanks to climate change and the war in Ukraine. Attacks on Red Sea shipping have helped as well. This brings additional notice to the Bering Strait, the only major maritime chokepoint between two nuclear powers. The US in December laid claim to an extended continental shelf in this area greater than the size of France. Much of this is considered prospective for critical minerals, oil, and gas.
SERBIA. Balkan chew gum
Belgrade tries to balance Brussels, Moscow and Beijing.
PowerChina broke ground Wednesday for Serbia's new National Stadium, ahead of a visit next week by Xi Jinping. Prime minister-elect Milos Vucevic said EU membership remains Belgrade's strategic goal but burdens "cannot be ignored".
INTELLIGENCE. Like Yugoslavia in the Cold War, Serbia wants to carve its own way between Russia and the West. But as pressure grows from the US on sanctions and the EU on Kosovo, Belgrade’s path is narrowing. Part of the challenge is political. Many Serbs want a pivot to the West, but an entrenched pro-Russian bloc remains. One of their strongest proponents, the Kremlin-linked ex-intelligence chief Aleksandar Vulin, was named a vice-premier Tuesday.
FOR BUSINESS. As with Yugoslavia, Serbia hopes close ties with China will open new options, and Beijing is happy to have a friend in the heart of Europe. China is now a bigger investor than the combined EU. Serbs enjoy greater visa-free access to China than most Europeans (though Albanians and Bosnians get more). The two have cooperated on energy, the Belt and Road, and COVID-19. It’s been a model watched by neighbouring Hungary, which Xi will also visit.
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ISRAEL. COLOMBIA. Hasta la vista, Bibi
Bogota breaks off relations. More could follow.
President Gustavo Petro Wednesday announced plans to sever ties with Israel to a cheering May Day rally. Colombia follows Belize and Bolivia, which recently suspended ties, and Cuba and Venezuela, which broke off relations earlier.
INTELLIGENCE. Petro’s announcement is mainly virtue signalling as his deals with the cartels and socialist reforms attract mounting criticism at home. Little will change beyond some minor arms sales and the post-service travel plans of IDF reservists. Yet diplomatic isolation is a trend Israel wants to avoid, particularly as it seeks to revive plans for Saudi normalisation and keeps hopes alive that Indonesia will recognise it as part of Jakarta’s OECD membership.
FOR BUSINESS. Israel's relations with Colombia were strong prior to Petro and will presumably snap back once there's a change in government. Yet normalisation with much of the Muslim world will be harder in the wake of Gaza. As evidenced by commercial boycotts (including on brands like KFC, which have only the vaguest links to Israel), the Palestinian cause remains popular. And without US pressure, there’s little incentive to risk the inevitable backlash.
ISRAEL. STUDENT PROTESTS. The Spring of ’24
Echoes of 1968 bode ill for the centre left.
Police gathered outside a pro-Palestinian encampment at UCLA Thursday morning after New York police cleared protesters at Columbia. Demonstrations spread across the world, from Europe to the McMurdo Station in Antarctica.
INTELLIGENCE. Aside from clashes in Los Angeles, protests have been largely peaceful, but the White House is worried about protesters crashing August’s Democratic National Convention in Chicago, in echoes of the anti-war riots of 1968, which helped Nixon's victory in November. It’s a concern shared by centrist and centre-left governments elsewhere, who rely on young people for volunteers and votes, and fear the results of a mainstream backlash.
FOR BUSINESS. The risk is particularly acute for UK Labour, which despite its lead over the Tories, faces a real threat from the left, as evidenced by the residual spectre of Jeremy Corbyn, fears of Muslim voters staying home in Northern constituencies, and the recent success of far-left conspiracy theorist George Galloway in a February by-election. This won’t be enough for Labour to lose but it could threaten Britain’s bipartisan support for Israel closer to the election.