Yemen: The Houthis and the blowback
Also: Libya, North Korea, China, and Papua New Guinea.
We included an incorrect news summary in yesterday’s report on Poland. The correct version can be found here.
YEMEN. The Houthis and the blowback
Washington hits back at persistent maritime strikes.
The US and Britain began retaliatory action on Yemeni soil, officials said Friday, following months of shipping attacks by the Houthi militia. The Houthis claimed Thursday their Red Sea attacks did not threaten peace talks with Riyadh.
INTELLIGENCE. The US has been reluctant to disrupt Saudi Arabia’s delicate negotiations in Yemen or expand the conflict in the Middle East. But the ongoing threat to Red Sea shipping, not to mention the signal this sends about US maritime predominance, has become intolerable. The Houthis’ play for negotiating leverage, with the Gaza conflict as a screen, may not, however, be in vain. They have shown a willingness to escalate and growing domestic support.
FOR BUSINESS. The Houthis control territory containing 80% of Yemen's 35 million people – a population as big as Saudi Arabia. They want recognition for their de facto state and urgent humanitarian aid. Iran denies in backs the group, which has in the past sought assistance from North Korea, Russia, and Syria. Yet Tehran’s seizure of an oil tanker in the Gulf of Oman signals tacit support. Yemen's civil war has killed almost 400,000 and displaced 4 million.
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LIBYA. It’s complicated
Oil field protests are part of a bigger struggle.
Protesters near Tripoli threatened Thursday to close the Mellitah complex and the Zawiya refinery. Analysts warned this would halt gas exports via the Greenstream pipeline to Italy, and 120,000 barrels of daily oil production, respectively.
INTELLIGENCE. Activists have already disrupted the 300,000 bpd Sharara field, forcing the National Oil Corporation to declare force majeure. Protesters have demanded the NOC’s chair resign. The moves come amid a wider contest between the Tripoli-based Government of National Unity – backed by Turkey, Qatar and Algeria – and the Sirte-based Government of National Stability, backed by warlord Khalifa Haftar and, indirectly, Egypt, Russia and the UAE.
FOR BUSINESS. The situation would be complicated enough if it weren’t for the fact that Italy and France also back opposing factions, leading to regular diplomatic spats and discord over EU migration policies (where Libya is a key transit point). Italy's Eni (which is a partner in Mellitah) and France's TotalEnergies are major investors in Libya. Russia and its erstwhile mercenary force Wagner are also players. Moscow last year hinted at a naval base in Libya.
NORTH KOREA. When the cat’s away
Pyongyang’s misbehaves as Washington and Seoul are distracted.
North Korea was using Ukraine as a testing ground for nuclear-capable missiles, South Korea said Thursday. Kim Jong Un urged arms makers on Monday to prepare for war. Pyongyang last week fired 200 artillery rounds into the south.
INTELLIGENCE. The North has made an art of escalation, usually with little effect, but in recent years has brazenly flouted UN resolutions and US warnings, often with the backing of China and Russia. As Kim reopens his country after years of COVID lockdowns, he is said to be preparing his daughter for a fourth generation of family rule. Believed to have turned 40 this week, he is in as bad health as the North’s economy, but this doesn't mean he's not dangerous.
FOR BUSINESS. If it weren’t for Ukraine, North Korea wouldn’t be receiving so much Russian assistance or US neglect. Still, its routine violation of norms is a blemish on the rules-based order. It is also a blemish on politics in Seoul, where – despite decades of bad faith – there is still no consensus on what to do with Pyongyang. South Korean politics has grown polarised as its domestic economy stagnates, marked by an attempted assassination and opposition splits.
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CHINA. Slouching tiger
As the world watches Taiwan, Beijing watches its economy.
Chinese consumer prices fell for a third consecutive month in December, data showed Friday, driving fears of Japan-style stagnation. Exports rose more than expected for the month but saw a yearly decline for the first time since 2016.
INTELLIGENCE. A halting economy would usually give rise to geopolitical misadventure, but a prolonged slump will more likely be a handbrake on Chinese irredentism. While few voters in Taiwan will want to test this theory, another handbrake is an unprepared People's Liberation Army. Bloomberg reported last week that a recent purge in the PLA's rocket force was due in part to rampant graft, including silos that didn't work and water being substituted for jet fuel.
FOR BUSINESS. Bloomberg’s claims are unprovable but accord with a moderating tone. And while Chinese data can be unreliable, the trends accord with greater friendliness to the West (though coercion continues for French brandy makers and Taiwan). Xi Jinping today hosts Belgium’s prime minister and spoke Wednesday to Finland’s president. China last week relaxed visa rules for Americans. Visa-free travel was recently given to several EU countries.
PAPUA NEW GUINEA. Second island pain
Mob violence in a Pacific battleground.
Prime Minister James Marape declared a state of emergency Thursday after 16 were killed in riots over a public sector pay glitch. Beijing lodged "solemn representations" to Port Moresby after looters attacked Chinese assets and citizens.
INTELLIGENCE. As it was in World War II, New Guinea is seen as a strategic front in control for the Pacific. In US policy planning, it forms part of the ‘second island chain’, which runs east of Japan and the Philippines via Guam, and which would come into play should the ‘first island chain’, which includes Taiwan and Okinawa, fall. For China, PNG is currently seen as part of the Western camp, but, as it was with the Solomon Islands, that could change in time.
FOR BUSINESS. Chinese nationals play a major role in PNG’s business sector, but as in other Pacific countries, they are often a target for crime. China has increased its presence in the region to protect its citizens, but also to challenge Western influence. The US and Australia have responded by opening embassies in a range of countries and signing defence pacts with PNG among others. Yet ultimately, this risks becoming a game of strategic whac-a-mole.