Global Developments and Analysis: Weekly Monitor, 03 October- 09 October

Economic

World’s Emergency-Lending Capacity Is Getting Stretched as Crises Deepen

Rapidly rising interest rates are squeezing the flow of private capital to the world’s poorest countries. The problem is that the preferred alternatives—the International Monetary Fund and World Bank—are getting quickly committed. Lending by the pair has reached a record as they help poor and emerging countries cope with the pandemic, soaring energy and food costs and the fallout from Russia’s invasion of Ukraine. Government officials gathering in Washington for the two institutions’ annual meetings this week, while trying to support countries in trouble, are being asked to ensure they have enough capacity to respond to future emergencies. The IMF has committed $258 billion to 93 countries since the onset of the pandemic, and an additional $90 billion to 16 countries since Russia’s invasion of Ukraine. Not all committed funds have been lent out. At the end of September, the IMF had a record $135 billion of loans outstanding, up 45% from 2019, and more than double the amount in 2017. “At the moment, there is no big emerging-market crisis and they have the capacity, but they are going to be very stretched if we head into more turbulent waters,” said Kenneth Rogoff, a Harvard economics professor and a former chief economist for the IMF. Click here to read... [2]

Roundup: Experts warn hunger, food insecurity rising in Africa

Hunger, food insecurity, and malnutrition are on the rise in Africa with the latest data showing that one in five people in Africa is facing hunger, African Union (AU) and United Nations officials have said. This came at the high-level food and nutrition conference held Oct 10 at the AU headquarters in Addis Ababa, the capital of Ethiopia, with the call to act with urgency to the current food insecurity and nutrition crisis unfolding across the continent. "Africa is no doubt facing one of the most alarming food crises in decades," said Josefa Sacko, AU commissioner of Agriculture, Rural Development, Blue Economy and Sustainable Environment, noting that the COVID-19 pandemic and the ongoing Russia-Ukraine conflict exacerbated the food insecurity and poverty in Africa given that Russia and Ukraine are major players of wheat and sunflower oil to Africa. The commissioner further said the increasing frequency and severity of climate shocks, regional conflicts and the COVID-19 pandemic have also disrupted food production and distribution, driving up the cost of food in the continent. Africa is experiencing the heinous burden of food insecurity with about 278 million of its people suffering from chronic hunger, said Abebe Haile-Gabriel, assistant director-general and Regional Representative for Africa of the Food and Agriculture Organization (FAO) of the United Nations, citing the latest report co-authored by the FAO. Click here to read... [3]

WTO Sees Sharp Slowdown in Global Trade, Pointing to Possible Recession

World trade in goods is projected to slow sharply next year under the weight of high energy prices, rising interest rates and war-related disruptions, raising the risk of a global recession, according to a new forecast. Total exports and imports of goods are likely to grow by just 1% in 2023, the World Trade Organization said on Oct 05. That would be down from its previous forecast of 3.4% and its forecast of 3.5% for this year. The WTO also lowered its forecast for global economic growth in 2023 to 2.3% from earlier expectations of 3.3%, and warned of an even sharper slowdown should central banks raise interest rates too sharply in their efforts to tame high inflation. The report follows multiple signs that global economic growth is weakening. “The global economy faces a multipronged crisis,” Ngozi Okonjo-Iweala, director-general of the WTO, the Geneva-based body responsible for enforcing the rules that govern global trade, told reporters in a news conference. “The picture for 2023 has darkened considerably.” The U.S. trade picture in August reflected the broad slowdown in demand. Exports of goods dropped 0.3% in August from the previous month, the first decline since January, the Commerce Department said Oct 05. Goods imports fell 1.5% during the same period. Click here to read... [4]

US breaks record for EU gas supplies – Reuters

The United States ramped up its supply of liquefied natural gas to Europe in September, Reuters reported this week, citing tracking data by Refinitiv Eikon. However, exports were below average overall for the first eight months of 2022 due to an outage at a major LNG terminal. US LNG production has been lagging behind full capacity since a fire in June brought it to a halt at the Freeport terminal, which is the second-largest liquefaction facility in the United States, accounting for a fifth of all US LNG exports prior to the incident. Meanwhile, demand and prices for LNG are rising as energy-starved European buyers seek alternatives to Russian gas. For the first time, Europe has superseded Asia as the biggest destination for US liquefied natural gas. According to previous reports by the US Energy Information Administration, the country sent almost three-quarters of all its liquefied natural gas to Europe in the first four months of 2022. The increase means the US now accounts for nearly half of the bloc’s LNG imports, about twice the share seen in 2021. But experts say that even though US LNG exports helped fill European gas stores ahead of schedule, the bill was 10 times higher than the historical average cost of filling up tanks for winter. Click here to read... [5]

Chevron Faces Tough Job Restarting Venezuela’s Damaged Oil Fields

As the Biden administration looks at relaxing sanctions to allow Chevron Corp. to pump oil in Venezuela again, the company is preparing to navigate myriad challenges in the country that could limit its ability to increase production quickly. Chevron will have to manage everything from fuel shortages to accident-prone oil infrastructure to security and corruption risks that could hamper its efforts to revitalize the country’s gutted oil industry. Some analysts said Venezuela’s oil production could increase by about 400,000 barrels a day in a matter of months to a year. That isn’t nearly enough to offset up to 2 million barrels of daily production the Organization of the Petroleum Exporting Countries and its Russia-led allies said they would cut Oct 05. Venezuela is likely to hit a ceiling eventually of about 1 million barrels a day in the medium term, still well below production levels before the U.S. sanctions, said Fernando Ferreira, an analyst at Rapidan Energy. “To get above that level would be challenging,” Mr. Ferreira said. “They’ll have to do a lot of refurbishing of the oil infrastructure, and that would require a lot of investment.” Click here to read... [6]

Israel, Lebanon Reach Rare Deal for Gas Extraction and Export to Europe

Israel and Lebanon have agreed to a U.S.-brokered deal demarcating a disputed maritime border, officials from both sides said Oct 11, easing recent tensions between the longtime foes and opening the way for Israel to export gas to Europe. The accord, which has been in the works for a decade, marks a rare instance of economic cooperation between the two countries, which have fought two major wars and don’t have diplomatic relations. Once signed, the agreement would allow Israel to quickly follow through on its commitment to sell gas to the European Union, which is searching for new energy sources following Russia’s invasion of Ukraine and subsequent sanctions on Moscow. “This is a historic achievement that will strengthen Israel’s security, bring billions into Israel’s economy and ensure stability on the northern border,” Israeli Prime Minister Yair Lapid said. “The final version of the offer satisfies Lebanon, meets its demands, and preserves its rights to its natural wealth,” Lebanese President Michel Aoun said separately. The leaders of both countries said they would still need approval from their governments before formally signing the deal, possibly later this month. Click here to read... [7]

China’s rapid LNG expansions power its push to maintain energy security in the face of crises

China is ramping up construction of liquefied natural gas (LNG) infrastructure – including receiving terminals and storage facilities – as the country secures more long-term buying contracts for the fuel amid growing concerns over energy security. “China is among the countries with a long list of LNG terminals under construction,” said Anne-Sophie Corbeau, a researcher with the Centre on Global Energy Policy at Columbia University. While some are being constructed from scratch, many existing terminals are undergoing expansions, she added. Late last month, a carrier from Qatar offloaded 210,000 cubic metres of LNG to a storage tank at the Yancheng Green Energy Port in eastern Jiangsu province, commencing operation of China’s largest LNG reserve base, according to local authorities. The new LNG port is an example of Yancheng thoroughly implementing President Xi Jinping’s energy-security strategy, the Yancheng government said on its website. The strategy, put forth by Xi in 2014, aims to revolutionise China’s energy consumption, supply, technology and systems, while enhancing international energy cooperation. Xi has also repeated warnings on energy security in the past two years, particularly as the country has encountered recurrent power crises. Beijing intends to build 34 coastal LNG-receiving terminals and add 224 billion cubic metres worth of receiving capacity by 2035, more than doubling the country’s current capacity, according to a draft plan issued by the Ministry of Transport in 2019. Click here to read... [8]

Putin orders seizure of Exxon-led Sakhalin 1 oil and gas project

Russian President Vladimir Putin signed a decree on Oct 07 that establishes a new operator for the Exxon Mobil Corp.-led Sakhalin-1 oil and gas project in Russia's Far East. Putin's move affecting Exxon's largest investment in Russia mimics a strategy he used to seize control of other energy properties in the country. The decree gives the Russian government authority to decide whether foreign shareholders can retain stakes in the project. Exxon holds a 30% operator stake in Sakhalin-1, with Russian company Rosneft, India's ONGC Videsh and Japan's SODECO as partners. Oil production at the Sakhalin-1 project fell to just 10,000 barrels per day (bpd) in July from 220,000 bpd before Russia invaded Ukraine. Exxon has been trying to exit its Russia operations and transfer its role in Sakhalin-1 to a partner since March, after international sanctions imposed on Moscow. Russia's government and Exxon have clashed, with the oil producer threatening to take the case to international arbitration. Exxon declined to comment on Oct 07's decree. Japan's SODECO was not immediately available to comment, but an official of the industry ministry, which owns a 50% stake in the firm, said it was gathering information and talking with partners. Japan has stopped buying crude from Russia since June. Click here to read... [9]

US and China both face tough struggles as war for chip supremacy intensifies following American export restrictions

Restrictions announced last week on Chinese access to US semiconductor technology raise the stakes significantly in the US-China tech war, but Washington’s bid to regain chip manufacturing primacy and slow China’s military and economic rise faces huge challenges, industry analysts said. The odds are long at best that the US chip industry can again dominate a field it pioneered, catch market leader Taiwan Semiconductor Manufacturing Company (TSMC) – which makes some 90 per cent of the world’s most advanced chips – or match Samsung Semiconductor Global any time soon. “The short answer is no,” said Paul Triolo, senior vice-president with Albright Stonebridge Group and a former electrical engineer in Silicon Valley. “This is really complicated industry. It’s expensive and you’d better put your money where your mouth is.” The United States is trying. In July, Congress passed the US$52.7 billion Chips and Science Act, which provides US$13.7 billion for R&D and US$39 billion for manufacturing subsides, although these amounts pale against those of foreign government’s or the capital spending of leading private competitors. And on Oct 07, the US Commerce Department imposed systematic semiconductor export restrictions on dozens of Chinese companies and research institutions days after the Pentagon expanded its own blacklist. Click here to read... [10]

Decoupling from China not an option for EU firms - Dombrovskis

Decoupling from China is not an option for companies in the European Union, EU trade commissioner Valdis Dombrovskis told an engineering conference in Berlin on Oct 11, as the Ukraine war redefines how the bloc sees its important trade partners. "The EU should continue engaging with China with pragmatism and without naivety. Our trading relationship needs more balance and reciprocity," he said, calling for more focus on better risk management and diversification instead of pulling away. Besides China, the EU's relations with its other important trade partner, the United States, have also changed, he said. "The transatlantic relationship has been reinvigorated," he said, but there are "deep concerns" about the U.S. Inflation Reduction Act and the advantages it affords to U.S. companies. Dombrovskis argued that the green subsidies provided for in the act discriminate against the EU's automotive, renewables, battery and energy-intensive industries. The $430 billion climate, health and tax bill was signed into law in August and has also prompted South Korea to raise concerns about tax credits for electric vehicle purchases. "I will be raising these issues with my American counterparts when I travel to Washington tomorrow," he said. German Chancellor Olaf Scholz, speaking at the same conference, said Germany will discuss the act with Washington. Click here to read... [11]

China issues $850.2 bln in local govt bonds in Jan-Aug to boost national economy

China issued a total of 390.9 billion yuan ($54.93 billion) worth of local government bonds in August, with the total amount from January to August in 2022 reaching 6.05 trillion yuan ($850.2 billion), statistics from the Ministry of Finance (MOF) revealed on Oct 08. Among the 390.9 billion yuan in August, general bonds made up 176 billion yuan and special bonds stood at 214.9 billion yuan. In the first eight months, the issuance of general bonds totaled 1.76 trillion yuan and that of special bonds totaled 4.29 trillion yuan. Local government bonds are usually used to finance local public works, including transport, communications, housing, and other sectors. Special bonds are a significant financial source for local infrastructure construction. As of September 21, a total of 11 provinces and cities across the country have made public their plans to issue local government bonds in the fourth quarter or October, with a total of 234.3 billion yuan in special bonds to be issued, media outlet yicai.com reported on Oct 07. As the nation's economy faces challenges from the COVID-19 pandemic and weakened overseas demands, the central government aims to increase the issuance of local government bonds to stimulate economic growth while gradually transferring the momentum of the stimulus to local governments for greater dynamism, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Oct 08. Click here to read... [12]

China gives clearest sign yet it will stick with zero-Covid strategy

For the second day in a row, Communist Party mouthpiece People’s Daily urged China to stick with its zero-Covid strategy, dampening hopes that controls would ease after a pivotal political meeting this month. The commentary is the clearest sign yet that the party is determined to continue with the stringent zero-Covid approach after its twice-a-decade national congress, which starts Oct 16. On Oct 10, the newspaper called for confidence and patience with the zero-Covid strategy, which aims to cut all virus transmission chains. Chinese President Xi Jinping has been portrayed by state media as leading a national pandemic control effort that has resulted in few deaths. He has staked considerable political capital on the purported superiority of China’s handling of the pandemic compared with the West. The public and some investors had hoped for a shift, however slight, from the present measures after the 20th party congress, where Xi is expected to secure a precedent-breaking third term as the party’s top leader. According to Oct 11’s commentary, China’s dynamic zero-Covid approach has balanced pandemic control with economic and social development, allowing China to achieve “extremely low” mortality and “smooth” social and economic functioning. “Dynamic zero is the anti-epidemic strategy with the lowest overall social cost and is the best option for the timely control of epidemics in China at this stage,” it said. Click here to read... [13]

Xi seen giving China's economic reins to trusted ally in third term

Chinese President Xi Jinping is expected to appoint one of his closest allies as economic czar as he prepares to kick off a third term at the helm of the Communist Party, a move seen further expanding Xi's involvement in macroeconomic policy and setting back market reforms. He Lifeng, chair of the powerful planning body National Reform and Development Commission, is seen as a likely successor to Vice Premier Liu He, Xi's current economic policy chief, who is expected to retire after a party congress in mid-October. In China, the general secretary of the ruling Communist Party typically takes charge of political matters, while the premier steers the economy. Xi and Premier Li Keqiang initially followed this template, though Xi has increasingly involved himself in economic policy since around 2016 through Liu, a close ally. Liu is director of the office of the party's Central Financial and Economic Affairs Commission, the organ responsible for charting China's general economic goals. He is also a key driver behind financial policy and served as China's lead negotiator during its trade war with the U.S. China watchers predict Liu's responsibilities will be passed down to He. The National Reform and Development Commission he oversees has wide-ranging responsibilities including crafting energy policies, supervising industries and approving new infrastructure projects. Click here to read... [14]

Sri Lanka cabinet approves downgrade to 'low income country'

Sri Lanka's cabinet has approved a proposal to downgrade the island nation's economic status to "low income country," in order to get access to concessional funding from international organizations, the cabinet spokesman said on Oct 11. Sri Lanka's economy is in a deep slump, shrinking at an annual 8.4% in the June quarter in one of the steepest quarterly declines. Per capita GDP was $3,815 in 2021, which had placed it in the lower-middle economy category, according to the World Bank. The cabinet had decided to downgrade the island to "low income" on the World Bank list, said cabinet spokesman Bandula Gunawardane. "Given the serious financial crisis Sri Lanka is facing representatives of international organizations had informed us that if Sri Lanka was categorized as a low income country access to funding would be easier," Gunawardane said. The South Asian island of 22 million people is battling its worst economic crisis since independence in 1948, brought about by COVID-19 battering its tourism-reliant economy and slashing remittances from workers overseas, rising oil prices, populist tax cuts and a seven-month ban on the import of chemical fertilizers last year that devastated agriculture. The crisis has led to an acute dollar shortage to pay for imports of food, fuel and medicine, a plunge in the rupee and runaway inflation. Click here to read... [15]

US imports from Russia increase despite sanctions – US Census Bureau

US imports from Russia reached $522.1 million in August, 7.7% more than the July total of $484.8 million, and marking the first monthly increase since April, according to a report released on Oct 05 by the US Census Bureau. The growth comes despite US President Joe Biden’s pledge to deal a “crushing blow” to Moscow through restrictions on commodity trade. According to analysts, Washington continues to benefit from the anti-Russia sanctions. While pressuring the EU to give up supplies from Russia, the US continues to buy hundreds of unsanctioned types of goods. “There is a tacit agreement between the US government and business: we puff our cheeks, and you trade with Russia if it suits you. Their words don’t meet their actions,” Aleksandr Razuvaev, a member of the supervisory council at Moscow’s Guild of Financial Analysts, told Russian state media on Oct 05. Meanwhile, exports of American goods to Russia slumped by 19% to $66.8 million in August from $82.5 million in July. In June, Russia imported goods worth $58 million, down from $77.4 million in May, and $89.1 million in April. The data shows that in total from January to August the US imported goods from Russia worth $12.1 billion, while exports stood at just $1.3 billion. Click here to read... [16]

US: New rules could mean big changes for gig economy

The US government on Oct 11 proposed a rule change that could make it more difficult for companies to classify gig workers as independent contractors. This would mean better benefits and access to minimum wages for the workers. A 45-day public comment period for the rules begins on Oct 13. Millions in the United States are hired for "gig" jobs, especially in the restaurant, construction, and healthcare industries. The change is expected to shake up ride-hailing and delivery-based companies such as Uber, Lyft, DoorDash and others who rely almost entirely on gig workers. What does the proposal include? The suggested changes would require workers to be labeled as employees when they are "economically dependent" on a company, giving them more benefits and legal protections compared to the contractor status. The new rule is expected to come into effect next year. It directs employers to consider six criteria for determining whether a worker is an employee or a contractor. The criteria include the degree of control by the employer, whether the work requires special skills, the degree of permanence of the relationship between worker and employer and the investment a worker makes, such as car payments. Currently, most federal and state labor laws only apply to company employees. These include minimum wage and overtime pay. Click here to read... [17]

Strategic

Massive wave of missile attacks reported across Ukraine

Multiple missile strikes targeted Ukrainian cities, all across the country, on Oct 10 morning, according to local officials and media. The news comes two days after a bomb damaged the strategic Crimean Bridge – which Moscow has labelled a Ukrainian terrorist attack. The office of Valery Zaluzhny, the commander-in-chief of the Ukrainian armed forces, reported they had detected at least 75 missiles and claimed they had intercepted 41. President Vladimir Zelensky confirmed the attacks throughout the country in a video address, saying numerous parts of Ukraine had come under fire, and claimed that Russia was targeting the energy infrastructure. “They want panic and chaos,” he said. Local officials in Lviv, Kharkov, and Odessa also reported that their cities came under fire. In Kiev, damage from the strikes was reported near the headquarters of the Security Service of Ukraine (SBU), which is located in the government area of the capital. City officials halted operations of the metro system, and the stations are now being used as shelters for civilians. With similar accounts coming in from many parts of the country, senior Ukrainian officials have expressed determination to fight Russia. “Our courage will never be destroyed by terrorists’ missiles, even when they hit the heart of our capital,” Defense Minister Aleksey Reznikov tweeted, also claiming that Russia’s future is that of “a globally despised rogue terrorist state.” Click here to read... [18]

Kremlin responds to rumored status change of Ukraine military operation

Moscow has denied rumors that the military operation in Ukraine is being redesignated as a counter-terrorism campaign, following Kiev’s attack on the Crimean Bridge. When asked about the supposed change, Kremlin spokesperson Dmitry Peskov replied: “Currently, no decisions have been made in this regard.” Previously, he said that the decision to designate the Russian campaign in Ukraine as a counter-terrorism operation can only be made by President Vladimir Putin. Peskov also said there have been no decisions on introducing martial law in Russian regions which have been targeted by Ukrainian strikes in recent weeks. Moscow’s campaign in Ukraine is officially designated as a ‘special military operation’. A ‘counter-terrorism operation’ (CTO), however, is a completely different matter in legal terms – it is intended to “uncover and prevent” an act of terrorism, minimize its effectiveness, and ultimately eliminate any threats to the population. A CTO also allows the government to call up more people to take part, including servicemen, the National Guard, police, emergency workers, and others. The spokesperson’s comments come after Putin declared the recent attack on the Crimean Bridge, which connects mainland Russia with the Crimean Peninsula, an act of terrorism carried out by Ukraine’s security services (SBU). Click here to read... [19]

As European leaders meet, questions remain over whether a new political club will actually work

Leaders from 44 European countries - the whole of the continent except Russia and Belarus - met on Oct 06 in Czech capital Prague to attend the inaugural meeting of the European Political Community, a new regional group proposed by French President Emmanuel Macron this May. While eyeing issues from Europe's security to soaring energy prices and a looming economic recession, analysts said the gathering could be just another "grand show of solidarity," a talking shop without any actual content. They warned that such a group could develop into a new bloc confrontation with Russia, further worsening Europe's security situation. The inaugural meeting included all 27 members of the European Union, plus 17 other nations including the UK, Ukraine and Turkey. The only two nations not invited were Russia and its neighboring ally Belarus, according to media reports. In remarks at the opening, Macron said the group's existence is aimed at "sending a message of unity to all European nations by building a strategic closeness and finding common strategies," media reported on Oct 06. Despite the rhetoric, critics questioned if any concrete results could be delivered, as no formal policy statements, resolutions or declarations were expected. Click here to read... [20]

Russians fleeing draft strain Kazakhstan's services, diplomacy

Kazakhstan has become a prime destination for Russian civilians seeking to avoid being drafted into the Ukraine war, but the influx is starting to strain the vast Central Asian country's services -- and potentially its relationship with Moscow. Around 200,000 people fleeing conscription have entered Kazakhstan since Moscow began its partial mobilization on Sept. 21, according to figures announced this week by the Kazakh government, which has so far welcomed them. About 147,000 have either moved on to third countries or returned to Russia, leaving Kazakhstan with 50,000 or so Russians staying for the time being. They are among hundreds of thousands more Russians who have fanned out to numerous destinations, from Mongolia to Finland to Turkey. Kazakhstan is an attractive option for those looking to avoid conscription, considering its long land border with Russia and membership in the Eurasian Economic Union, a regional free trade bloc that allows Russians to enter the country without visas for up to 90 days. They do not even need passports, as they can their use Russian identity cards. The Russian language is still widely spoken across the former Soviet republic, and Russian bank cards and services such as Yandex taxis can be easily accessed. Kazakhstan's government is talking up potential positives of the inflow of Russians. Last week, President Kassym-Jomart Tokayev commented on the thousands fleeing mobilization, referring to it as a "humanitarian matter." Click here to read... [21]

US and Russia make headway in nuclear talks – media

Russia and the US have managed to achieve “significant progress” in talks over resuming nuclear inspections within the New START treaty, Russian newspaper Izvestia reported on Oct 06, citing the Foreign Ministry. The sides are also apparently mulling face-to-face negotiations to remedy remaining issues. According to the Russian Foreign Ministry, as quoted by the outlet, Moscow and Washington are looking into reviving mutual inspection of nuclear arsenals. The ministry noted that the US and Russia are negotiating “over relevant channels” on how to return “to the full implementation of the treaty” in the element relating to verification mechanisms. It went on to say that the sides are holding virtual talks within the New START bilateral consultative panel. “At the moment, the possibilities for holding its next session in face-to-face format are being explored,” the ministry added. Russia and the US are also discussing “what organizational and technical problems need to be solved,” it told the outlet, adding that “significant progress” has been made to remedy a number of issues, but some “considerable difficulties remain.” These difficulties are said to include Covid-19-related issues that require “a final settlement.” Another major sticking point, apparently, is the West’s sanctions over the Ukraine conflict Click here to read... [22]

Saudi Arabia Defied U.S. Warnings Ahead of OPEC+ Production Cut

Days before a major oil-production cut by OPEC and its Russia-led allies, U.S. officials called their counterparts in Saudi Arabia and other big Gulf producers with an urgent appeal—delay the decision for another month, according to people familiar with the talks. The answer: a resounding no. U.S. officials warned Saudi leaders that a cut would be viewed as a clear choice by Riyadh to side with Russia in the Ukraine war and that the move would weaken already-waning support in Washington for the kingdom, the people said. Saudi officials dismissed the requests, which they viewed as a political gambit by the Biden administration to avoid bad news ahead of the U.S. midterm elections, on which control of Congress hangs. High gas prices and inflation have been central issues in the campaign. Instead, the people said, the kingdom leaned on its OPEC allies to approve the cut, which is aimed at reducing production by 2 million barrels a day. Adrienne Watson, a National Security Council spokeswoman, rejected Saudi contentions that the Biden administration efforts were driven by political calculations. U.S. officials questioned a Saudi analysis that the price of oil was about to plunge and urged them to wait and see how the market reacted. If the price did collapse, U.S. officials told their Saudi counterparts, OPEC+ could react whenever they needed. Click here to read... [23]

China leads region in military self-sufficiency, with others far behind, report says

China has the highest level of self-sufficiency in weapons production in the Indo-Pacific region, with second-placed Japan not even close, according to a research report released this month. Although full self-reliance in armaments – the capability of a country to design and produce the military goods its armed forces need without foreign technological input – is almost impossible to achieve, countries, especially in Asia, are still seeking more of it, according to the report by the Stockholm International Peace Research Institute. Military commentator Song Zhongping said China’s high level of self-reliance in arms production was the result of historical lessons, and would ensure the supply and repair of equipment in any war. “Globally, apart from China, there are only the US, Russia and France doing well in weapons self-reliance,” he said. “And China might be able to score even higher than the US, which heavily relies on its allies to supply some key weapons parts.” Amid rising Indo-Pacific tensions, the report – “Arms-Production Capabilities in the Indo-Pacific Region: Measuring Self-reliance” – assessed 12 cases in the region, excluding the United States. It concluded that “China dominates the ranking”, with its score more than two and a half times higher than Japan’s. South Korea was third, and India, the world’s second-largest importer of weapons, fourth thanks to its “Make in India” campaign. Click here to read... [24]

Australian defence projects are billions over budget, decades late

Major Australian defence projects with approved budgets totalling more than A$70 billion (US$45 billion) are over budget and cumulatively decades late, the Australian government said on Oct 10, amid China's plans to increase its influence in the Pacific. At least 28 defence projects are collectively 97 years late, including the A$44 billion anti-submarine frigates programme and purchases of 12 offshore patrol vessel and a digital battlefield command system, Defence Minister Richard Marles said. "All of this has occurred at a time when our strategic circumstances are very complex and extremely challenging," Marles said during a media briefing. China's plans to set up presence in the Pacific, including entering a security pact with Solomon Islands, has raised concerns in the United States and Australia, who have for decades seen the region as largely their sphere of influence. The government will set up an independent projects management office within defence to keep a close eye on projects to avoid delays and keep them within budget, Marles said. Separately, at least 18 projects are facing cost overruns of roughly A$6.5 billion, the government said. Cost estimates do not include the upcoming purchase of eight nuclear submarines, under an agreement with the United States and Britain. Click here to read... [25]

Iran protests over woman's death persist despite crackdown, oil workers strike

Clashes between protesters and security forces persisted across Iran on Oct 11, with social media videos showing tanks being transported to Kurdish areas, which have been a focal point of the crackdown on protests over Mahsa Amini's death in custody. Protests calling for the fall of the clerical establishment have swept Iran since Amini, a 22-year-old Iranian Kurdish woman, died on Sep 16 while being detained by the morality police in Tehran for "inappropriate attire". While observers do not believe the unrest, now in its fourth week, is close to toppling the government, the protests mark one of the boldest challenges to the Islamic Republic since the 1979 revolution, with reports of strikes spreading to the vital energy sector. The authorities are waging a deadly crackdown. Videos on social media showed trucks moving dark green tanks to Kurdish areas, raising the stakes in the revolt. Reuters could not verify the video footage. Tensions have been especially high in Kurdish regions, given Amini's ethnic background. Human rights groups say Iran's Kurdish minority of more than 10 million has long been oppressed - a charge the Islamic Republic denies. The Hengaw human rights group reported "intense conflict" on Oct 11 between protesters and security forces in three cities in Kurdistan province - Sanandaj, Baneh and Saqez, where Amini was buried last month. Click here to read... [26]

Three 'cushions' help Japan, South Korea leaders hold first talks

Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk-yeol held their first face-to-face talks on Sept. 21 in New York. The brief meeting, which took place on the sidelines of the U.N. General Assembly, was the first between leaders of the two countries since December 2019, and both sides had carefully prepared for the occasion to avoid backlash at home. The 30-minute talks were described by Tokyo and Seoul as "informal," indicating their delicate nature, as both leaders must consider voter sentiment in their countries. The two governments are also keenly aware of the need for direct talks between their leaders as they work more closely with the U.S. to counter common threats from China, Russia and North Korea. But the deep distrust of South Korea in Japan, not only in political and bureaucratic circles but also among the public, poses a big hurdle for high-level talks in security and other areas -- not to mention bilateral summits. Tokyo and Seoul thus devised a "three-cushion" approach to make their reconciliation efforts more palatable to voters and politicians back home. Under this approach, the two countries are trying to introduce at least one of the following features in their bilateral dealings: the involvement of the U.S., a venue outside Japan and South Korea, and the use of an international framework. Click here to read... [27]

North Korea in final stages of nuclear test preparations: U.N. report

North Korea is in the final stages of preparations for a nuclear weapons test, with activities pointing to excavation of an underground tunnel and testing of triggering devices, a United Nations Security Council panel says in an expert report. North Korea has expanded production capability for nuclear fissile materials at the Yongbyon nuclear testing site, according to the report released on Oct 07. The panel "observed that in March 2022 the country started re-excavation at the entrance to Tunnel 3 ... at the Punggye-ri nuclear test site and reconstructed support buildings dismantled in May 2018," the document says. "Work at the Punggye-ri nuclear test site paves the way for additional nuclear tests for the development of nuclear weapons," the report says. If conducted, it would mark North Korea's seventh nuclear test. Pyongyang is stepping up provocations by firing a missile over Japan for the first time in five years while seeking ways to evade international sanctions. The report, which covers activities from January through July, is nonbinding, but it could prompt the Security Council or U.N. member nations to call for tougher sanctions. The panel also accuses North Korea of continuing to import petroleum products in violation of international sanctions. Click here to read... [28]

U.N. rights body rejects Western bid to debate Xinjiang abuses

In a close diplomatic victory for China, the U.N.'s top human rights body on Oct 06 voted down a proposal from Britain, Turkey, the United States and other mostly Western countries to hold a debate on alleged rights abuses against Muslim Uighurs and other ethnic minorities in China's western Xinjiang region. At the 47-member state Human Rights Council, 17 countries voted in favor, 19 were against, and 11 abstained in a vote to hold a debate on Xinjiang at its next session in March. The vote amounted to a test of political and diplomatic clout between the West and Beijing and would have marked the first time that China's record on human rights would merit a specific agenda item at the council. The result, prompting a smattering of applause in the chamber, followed days of diplomatic arm-twisting in Geneva and in many national capitals as leading Western countries tried to build momentum on a report from former U.N. human rights chief Michelle Bachelet's office, released Aug. 31, which found that possible “crimes against humanity” had occurred in Xinjiang. A simple majority of voting countries was required. China locked down “no” votes among its usual allies, plus many African countries and Persian Gulf states Qatar and the United Arab Emirates. Click here to read... [29]

‘If this is not provocation, what is it?’: Taiwan says mainland China sends 4-6 warships every day

The People’s Liberation Army has deployed between four and six warships in waters close to Taiwan every day since August, the island’s defence minister Chiu Kuo-cheng said on Oct 11. Chiu said Beijing’s deployments were in addition to the PLA sending multiple daily warplane sorties to the self-ruled island’s air defence identification zone or across the median line in the Taiwan Strait – a de facto line separating the island and the mainland. Calling the actions proof of provocation from the mainland side, he said the island’s military had tried as much as it could to avoid escalating tensions in the Taiwan Strait. “But even in peacetime, the PLA has dispatched more than 20 warplanes to fly by Taiwan and cross the median line. Each day it has also deployed four to six warships, or more, in waters around us,” Chiu said. It is the first time the island’s military has revealed its count of PLA warships deployed close to the island every day – a move by the mainland that observers said could help its forces launch a sea blockade or attack the island in a potential cross-strait conflict. Chiu’s comments came after Beijing hit out at Taiwanese President Tsai Ing-wen, accusing her of exaggerating PLA threats to the island in a speech on Oct 10 marking the Double Tenth Day – the 111th anniversary of the Republic of China, Taiwan’s official title. Click here to read... [30]

US unveils new Arctic strategy to tackle climate threat, China and Russia’s influence

US President Joe Biden’s administration released a new Arctic strategy on Oct 07 as the strategically and environmentally important region suffers worsening effects from climate change and sees increased international competition. Global warming is melting Arctic ice, opening previously closed areas to navigation and creating new opportunities for countries such as the United States, Russia and China to vie for resources and influence. The situation is further complicated by the invasion of Ukraine by Russia – a major Arctic power – which has increased tensions between Moscow and Washington to a level not seen since the height of the Cold War. “The Arctic – home to more than four million people, extensive natural resources, and unique ecosystems – is undergoing a dramatic transformation,” the strategy says. “Driven by climate change, this transformation will challenge livelihoods in the Arctic, will create new economic opportunities, and could intensify strategic competition among countries.” The strategy features four main pillars: security, climate change and environmental protection, sustainable economic development, and international cooperation. “Our highest priority is to protect the American people and our sovereign territory and rights. We are committed to the security of our treaty allies and to supporting our partners in the region,” the strategy says. Click here to read... [31]

Egyptian, Greek FMs meet for talks after Turkey-Libya gas exploration deal

Foreign ministers of Egypt and Greece held talks in Cairo, Egypt on Oct 09, following a recent oil and gas exploration deal signed between Turkey and the Libyan Government of National Unity. Greek Foreign Minister Nikos Dendias described the deal as a "threat to regional stability," stressing that achieving stability in Libya and in the eastern Mediterranean region is one of the "strategic goals" for both Greece and Egypt. He urged for holding the Libyan elections to maintain Libya's stability and territorial integrity, adding "Greece supports the efforts to pave the way for holding the presidential and parliamentary elections in Libya." "The outgoing unity government in Tripoli doesn't have the authority to conclude any international agreements or memoranda of understanding," Egyptian Foreign Minister Sameh Shoukry said, adding the Libyan Government of National Unity came through a ­UN-approved road map by the Libyan Political Dialogue Forum with a specific mission and term to hold the Libyan presidential and parliamentary elections on December 24, 2021, which it failed to do. Libya has been divided into two rival administrations since March, when the eastern-based House of Representatives, or the parliament, appointed ­Fathi Bashagha as prime minister while Tripoli-based Prime Minister Abdul-Hamed Dbeibah refused to step down, saying he would only hand over office to an elected government. Click here to read... [32]

Health

African nation ‘on alert’ over Ebola outbreak

A Nigerian health watchdog has called on the nation to be on alert over an outbreak of Ebola in Uganda. The hemorrhagic viral disease, notorious for its high mortality rate, may spread into the country with air passengers, it warned. “The likelihood of importation to Nigeria is high due to the increased air travel between Nigeria and Uganda, especially through Kenya’s Nairobi airport, a regional transport hub, and other neighboring countries that share a direct border with Uganda,” the statement released by the Nigeria Center for Disease Control (NCDC) said. If imported, it may spread domestically through mass gatherings, political rallies, religious ceremonies or festivals, the organization warned. The national system for detecting Ebola infections is now “in alert mode,” it announced. While the risk posed by the virus is high, Nigeria has the technology, trained medics and testing capacities to “respond effectively in the event of an outbreak,” the NCDC explained, citing the country’s experience in dealing with an outbreak in 2014. The epidemic nearly a decade ago was the biggest on record. The infection spread far from Western Africa, where it is endemic in animals, and reached Europe and the US. The World Health Organization (WHO) reported 28,616 suspected, probable, and confirmed cases and 11,310 deaths in Guinea, Sierra Leone, and Liberia, the three nations most affected. Click here to read... [33]

Highly contagious Omicron variant BA.5.1.7 identified in Chinese mainland for first time

A new Omicron variant that has caused multiple infections in Shaoguan, South China's Guangdong Province, has been identified as the subvariant BA.5.1.7. It's the first time the variant has been detected in the Chinese mainland. According to the Shaoguan government, there have been a number of imported COVID-19 cases with multiple sources and multiple chains in the city, leading to successive positive cases in Shaoguan. The latest flare-up in the city has two major transmission chains respectively caused by Omicron variants BA.5.1.7 and BF.7, both of which are highly infectious with fast spreading speed, a statement from the official social media account of the local people's government said on Oct 09. The subvariant BA.5.1.7 - discovered in more than 100 countries and regions - was detected in the mainland for the first time, said Li Shujian, deputy director of the local disease prevention and control center. The highly contagious BA.5.1.7 caused several infections on the same transmission chain in Shaoguan during a dinner gathering on October 1, according to the local government. The subvariant BA.5 that has dominated coronavirus cases in the US, the UK and other countries and regions is the most easily transmissible COVID variant to date, able to evade previous immunity from COVID infection and vaccination, according to Western media reports. Click here to read... [34]