Global Developments and Analysis: Weekly Monitor (22-28 May)

Economic

Asian leaders home in on economic security in face of U.S.-China rift

Top Asian officials expressed worry about the increasingly fractious U.S.-China relationship at Nikkei's Future of Asia forum that began May 25, as deepening rifts threaten the development of a region that has been an engine of globalization and free trade. "Sri Lanka welcomes the G-7's announcement that they are prepared to build a stable and constructive relationship with China," Sri Lankan President Ranil Wickremesinghe said, praising the communique from last week's Group of Seven summit in Japan that signaled a move away from decoupling. The statement emphasized "de-risking" as a new economic security keyword. The idea is to work to counter "economic coercion" by Beijing, which restricts investment and trade with countries it considers unfriendly, by reducing supply chain dependencies -- but focusing just on critical areas like semiconductors and minerals. The change in tack suggests a degree of consideration for developing countries with close ties to China. But it does not mean the tension between Washington and Beijing is easing. The curbs on exports of advanced semiconductor technology to China imposed by the U.S. last October have had a major impact on Asia. "Any attempt either to contain China's rise or to limit America's presence in the region will have few takers," Singapore Deputy Prime Minister Lawrence Wong said. "Nobody wants to see a new cold war." Click here to read... [2]

U.S.-China economic talks resume while defense dialogue stalls

U.S. Commerce Secretary Gina Raimondo met May 25 with Chinese counterpart Wang Wentao in Washington, the first bilateral cabinet-level encounter since an American fighter jet downed a Chinese surveillance balloon off the coast of South Carolina in February. The meeting was held days after President Joe Biden stressed that a "thaw" in bilateral relations would occur soon during a press conference at the conclusion of the Group of Seven annual leaders meeting in Hiroshima, Japan. But while talks resume on the economic front, Washington and Beijing remain in a standoff over a meeting of their foreign and defense ministers. According to a readout provided by the U.S. Commerce Department, Raimondo and Wang had "candid and substantive discussions" on issues including the overall environment in both countries for trade and investment and areas for potential cooperation. Raimondo raised concerns about the recent Beijing's actions against U.S. companies operating in China and committed to maintaining open lines of communications, the readout said. The meeting of commerce chiefs grew out of talks on May 10-11 between U.S. national security adviser Jake Sullivan and top Chinese diplomat Wang Yi. They agreed to resume talks between senior officials during a conversation in Vienna that stretched for more than eight hours. Click here to read... [3]

U.S. banks' China ambitions wane as political tensions linger

Several major U.S. banks have been hit by the harsh reality of tensions between the world's two biggest economies, making expansion in China -- once thought of as a "holy grail" of opportunity -- increasingly fraught with risk. Banks have begun to consider reducing staff in the region as Washington and Beijing remain entrenched in a trade war that has spanned two U.S. administrations, leading to an uptick in regulation and sanctions from both sides. "The idea was to get a foothold and then grow the business, and even if you have to invest a good deal now, you're going to make more and more profits over time," said David Williams, a former investment banker for Merrill Lynch in Hong Kong who now runs his own firm. "That calculus has shifted," he said. Goldman Sachs and Morgan Stanley are eying staff cuts to their Asia Pacific teams, according to a Bloomberg report, with the latter considering laying off up to 7% of its investment banking team in the region. Goldman Sachs and Morgan Stanley declined Nikkei Asia's request for comment. The belt-tightening comes more than five years into a trade war between the U.S. and China that began under the Trump administration and continues between Chinese President Xi Jinping and U.S. President Joe Biden. Click here to read... [4]

UN conference pledges fall short of $7bn goal for Horn of Africa

A United Nations-backed conference raised $2.4bn on May 24 to prevent famine in the Horn of Africa, which is reeling from its worst drought in decades as global temperatures rise. The money will provide life-saving assistance for nearly 32 million people across Ethiopia, Kenya and Somalia, the world body’s humanitarian agency OCHA said in a statement. “Famine has been averted, thanks in part to the tremendous efforts of local communities, humanitarian organizations and authorities, as well as the support of donors,” OCHA said. But the sum is considerably less than the $7bn the United Nations says is needed to provide help to people affected by drought and conflict in the region. “The emergency is far from over, and additional resources are urgently required to prevent a return to the worst-case scenario,” OCHA added. Since late 2020, countries in the Horn of Africa – Djibouti, Ethiopia, Eritrea, Kenya, Somalia, South Sudan and Sudan — have been suffering the region’s worst drought in 40 years. Five failed rainy seasons have left millions of people in need, decimated crops and killed millions of livestock. More than 23.5 million people are enduring high levels of acute food insecurity in Ethiopia, Kenya and Somalia, according to OCHA. Click here to read... [5]

China loses millions of tonnes of wheat right before harvest, with global price implications

Continuous rain and high humidity across China’s wheat-production base have left large swathes of the crop blighted or affected by sprout damage, threatening crop yields in the world’s largest producer and consumer of wheat. Millions of tonnes of unharvested wheat have been affected by unusually heavy rainfall in central China’s Henan province – which accounts for more than a quarter of China’s wheat output – and in neighbouring areas, according to an estimate by an agricultural analyst. The damage from the pre-harvest deluge, which started on May 25 and stretched into this week, prompted the Henan provincial to set up a 200-million-yuan (US$28.3 million) emergency fund on May 30 to help farmers. The response came as Beijing has put unprecedented emphasis on ensuring adequate food production, and it recently warned provincial governors and party secretaries that they must “shoulder the responsibility of food security”. Farmers in the province, as well as other wheat-growing regions such as Anhui, Hubei and parts of Shaanxi, have seen wheat kernels suffer from pre-harvest germination, also known as sprout damage. Wheat has also been infected by blight, which brings higher risks of toxins and limits end-use applications, such as baking. Images of the affected crops have been widely circulated online and in local media coverage, with farmers lamenting their diminished yields and financial losses. Click here to read... [6]

1st made-in-China passenger plane makes maiden commercial trip

China’s first domestically made passenger jet made its maiden commercial flight on May 28, as the country looks to compete with industry giants such as Boeing and Airbus in the global aircraft market. The C919 plane, built by the Commercial Aviation Corp. of China, carried about 130 passengers, according to the state-owned newspaper China Daily. The jet took off May 28 morning from Shanghai Hongqiao Airport and landed less than two hours later in Beijing. The flight was operated by state-owned China Eastern Airlines and the side of the plane was emblazoned with the words: “The World’s First C919.” The inaugural flight comes as COMAC looks to break into the single-aisle jet market in a direct challenge to Airbus and Boeing. Airbus’s A320 and Boeing’s B737 jets are the most popular aircrafts typically used for domestic and regional flights. While COMAC designed many of the C919’s parts, some of its key components are still sourced from the West, including its engine. The company plans to build 150 C919 planes each year for the next five years, according to earlier state media reports. The C919, which had been in development for 16 years, has a maximum range of around 5,630 kilometers and is designed to carry between 158 and 168 passengers. More than 1,200 of the C919 jetliners have been ordered, COMAC says, with China Eastern Airlines under contract to buy five of them. Click here to read... [7]

Text of US debt ceiling bill released

The text of a hard-fought agreement to raise the US debt limit was released to the public on May 28, ahead of an expected vote in Congress as soon as May 31. Treasury Secretary Janet Yellen has warned that the country could default on its obligations as early as June 5 if the ceiling is not raised. The 99-page “Fiscal Responsibility Act of 2023” raises the debt limit for two years and sets discretionary spending limits through 2029. It sets a generous limit of $886 billion for the 2024 defense budget and $895 billion for 2025, while non-military discretionary programs get just $637 billion. The bill contains relatively few of the spending cuts Republicans had demanded, aside from rescinding $1.4 billion that had been allocated to the Internal Revenue Service in a controversial expansion of that department under the Inflation Reduction Act and reclaiming $28 billion in unspent Covid-19 funding. Members of Congress have at minimum 72 hours to review the bill before voting, meaning the earliest it will head to the House floor is May 31– though its passage is not guaranteed, with members of both parties objecting to elements of the deal. Representative Chip Roy (R-Texas) described the agreement as a “turd sandwich” on May 28, summing up the feelings of Republicans who believe upping the debt ceiling by $4 trillion without significant cuts is wildly fiscally irresponsible. Click here to read... [8]

UnionPay overtakes Visa in global debit card transactions – Nilson Report

Chinese payment system UnionPay has overtaken rival Visa on the global debit card market, research by analytical company Nilson Report has found. According to the study, UnionPay’s share of debit card transactions reached 40.03% in 2022, while the share of Visa transactions was around 38.8%. The volume of settlements made through UnionPay cards was also bigger, reaching $16.227 billion against Visa’s $14.109 billion. In 2021, Visa had a larger market share – 39.53% – compared with UnionPay’s 38.68%. The study notes that this was a significant shift in market share from a decade ago, when the share of Visa debit card transactions in the global market was nearly 80%, compared with UnionPay’s 1-2%. At the time, UnionPay was mostly used in the domestic market. Another payment card system, MasterCard, saw its debit card transactions market share plunge from 39.53% in 2021 to 21.19% last year. Experts told Izvestia newspaper that one of the major reasons for the surge in UnionPay transactions is the rapid economic growth of the Asia-Pacific region, where the system is widely used. “The UnionPay system is used most often in China and other countries in the Asia-Pacific region. In recent years, they have been experiencing faster economic growth, which, in turn, has contributed to an increase in the volume of card transactions. Hence the increase in the market share of UnionPay,” Igor Dodonov, an analyst at Finam Group, told the news outlet. Click here to read... [9]

Saudi foreign reserves plunge to lowest in 13 years – data

Saudi Arabia’s foreign exchange reserves plunged last month to their lowest level in 13 years, a report published by the Saudi Central Bank (SAMA) on May 28 shows. According to the figures, the kingdom’s net foreign assets dropped to 1.538 trillion riyals ($410 billion) in April, down by $8.8 billion from March. This represents the fifth consecutive month of declines and the longest streak of drops since early 2019. Reserves are currently down more than 44% since hitting an all-time high at around $737 billion in August 2014, and are at their lowest level since dropping to $418 billion in April 2010. According to analysts who spoke to Bloomberg, the recent drop in net reserves coincided with a decrease in the government’s injections into reserves. “The drop in SAMA’s FX reserves came in parallel to a drop in government deposits at SAMA,” Mohamed Abu Basha, head of macroeconomic research at Cairo-based investment bank EFG Hermes, told the news outlet. Being the globe’s largest oil exporter, Saudi Arabia has traditionally been reliant on the profits it generates from crude sales, and used to deposit a significant portion of that money into its reserve fund. However, last year the government pledged to “decouple” state spending from oil revenues, preferring to keep these funds on its current account until the Finance Committee decides how to allocate them. Click here to read... [10]

Saudi Arabia, Russia Ties Under Strain Over Oil-Production Cuts

Tensions are rising between Saudi Arabia and Russia as Moscow keeps pumping huge volumes of cheaper crude into the market that is undermining Riyadh’s efforts to bolster energy prices, people familiar with the matter say. Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, has expressed its anger to Russia for not following through fully on its pledge to throttle production in response to Western sanctions, the people said. Saudi officials have complained to senior Russian officials and asked them to respect the agreed cuts, the people said. The friction is very apparent between two of the world’s biggest oil producers ahead of a crucial meeting between members of OPEC and a group of Russia-led oil producers, collectively known as OPEC+, in Vienna on June 4, the people said. The cartel is set to decide on a production plan for the second half of the year amid growing concerns about a slowing global economy crimping energy demand. Earlier this week, the Saudi energy minister issued a warning to oil speculators, signaling to the market that a further production cut was on the table amid worries over the latest buildup in short positions and Russia’s failure to meet its promised voluntary cuts. Meanwhile, Russian President Vladimir Putin said oil prices were approaching “economically justified” levels, indicating that there might not be a need for an immediate change to the group’s production policy. Click here to read... [11]

NEOM Obtains Funding for the World’s Largest Green Hydrogen Plant

NEOM Green Hydrogen Company, which is building the world’s biggest green hydrogen plant in Saudi Arabia, on May 22 said it had reached the financial close on the world’s largest green hydrogen production facility, which will need total investments of $8.4 billion. The project at a total value of $8.4 billion is being financed with $6.1 billion non-recourse financing from 23 local, regional, and international banks and financial institutions, NEOM Green Hydrogen Company said in a statement today. NEOM Green Hydrogen Company (NGHC) is an equal joint venture by ACWA Power, Air Products, and NEOM. The company plans to build the world’s largest green hydrogen plant to produce green ammonia at scale in 2026. The plant is currently being built at Oxagon, in Saudi Arabia’s region of NEOM, the planned smart city of the Kingdom. NGHC has also concluded the engineering, procurement, and construction (EPC) agreement with Air Products as the nominated contractor and system integrator for the entire facility, the joint venture company said on Monday. Air Products, in turn, has already awarded major contracts to various technology and construction partners. NGHC’s non-recourse financing structure for the project has been certified by S&P Global (as the second-party opinion provider) as adhering to the green loan principles. Click here to read... [12]

Iraq Oil Output Continues To Fall Amid Turkey Spat

Oil production in Iraq’s semi-autonomous Kurdistan Regional Government (KRG)-ruled region has continued to drop, extending a stoppage that has lasted nearly two months. Export flows to Türkiye's Ceyhan port show few signs of restarting months after Ankara halted Iraq’s 450,000 barrels per day (bpd) of exports through the Iraq-Türkiye pipeline on March 25 following an ICC ruling that Türkiye should pay Baghdad damages of $1.5 billion for unauthorized exports by the KRG. The stoppage is estimated to have cost the KRG more than $1.5 billion, with fields that had continued producing are now offline or operating with reduced output. About 10 days ago, The Iraqi State Organization for Marketing of Oil notified the Turkish state energy company Petroleum Pipeline Corporation of resuming export and loading operations. Lat month, the Iraqi federal government and the Kurdish regional government signed an agreement to resume Kurdish oil exports via Türkiye. However, Türkiye continued to halt the oil flow, saying it wants to negotiate the arbitration before exports resume. Iraq's economy relies heavily on crude oil exports, with crude accounting for more than 90 percent of the country's revenues. The delay in resumption of exports comes at a time when French oil and gas multinational TotalEnergies finally reached an agreement with the government of Iraq to start a long-delayed $27 billion energy project. Click here to read... [13]

Houthis Sign Deal With China for Oil Exploration in Yemen

The Houthi-led government in Yemen this weekend signed a deal with Chinese officials and a Chinese company that will invest in oil exploration in Yemen. China’s Anton Oilfield Services Group (AntonOil) and a representative of the Chinese government signed on May 20 the memorandum of understanding (MoU) for investment in Yemen’s upstream sector, Middle East Monitor reported, citing a report by the Sanaa-based Saba News agency. Oil and Minerals Minister Ahmed Dares invited foreign companies to visit Yemen to see the potential for investment opportunities. “There are many ongoing negotiations with various high-profile companies to invest in the country's oil exploration sector,” the minister was quoted as saying. At the same time, the Houthi-led government warned foreign companies to refrain from dealing with the Saudi-backed Presidential Leadership Council, which represents the internationally-recognized government of Yemen. At the end of last year, Yemen's Houthis warned oil companies operating in Saudi Arabia and the United Arab Emirates (UAE) to pack up and leave as the warring sides in the Yemeni conflict failed to reach an agreement to extend the six-month truce. Earlier this year, reports emerged that Iran had agreed to stop supplying weapons to the Houthi movement in Yemen as part of the deal to restore diplomatic relations with Saudi Arabia, U.S. and Saudi officials told The Wall Street Journal in March. Click here to read... [14]

China suspends plan to build floating nuclear reactors in the South China Sea

The future of an ambitious Chinese plan to build a fleet of nuclear power reactors that would float on the waters of the South China Sea remained uncertain after authorities expressed security concerns, according to engineers involved in the project. With construction ready to begin, regulators have withheld final approval to build the nation’s first floating nuclear power plant, which was intended to generate electricity for critical marine infrastructure, some of it far from the mainland. “Floating nuclear power plants have various natural advantages and the technology to build them is ready. Both China National Nuclear Corporation and China Shipbuilding Industry Corporation have been actively conducting research and development work. However, construction of China’s first floating nuclear power plant demonstration project has yet to be approved,” said a team led by senior engineer Wang Donghui from the National Energy Offshore Nuclear Power Platform Technology Research Centre. “Safety and feasibility are still the main concerns of the regulatory authorities,” Wang and his colleagues said in a paper published in the peer-reviewed journal Nuclear Power Engineering on May 25. The move was a surprise for the project’s scientists, since floating nuclear power reactors are generally regarded as safer than those on land. Click here to read... [15]

Immigrants’ Share of the U.S. Labor Force Grows to a New High

Foreign-born workers’ share of the U.S. labor force rose last year to the highest level in 27 years of records, as labor demand surged and the pandemic faded. People born outside the U.S. made up 18.1% of the overall labor force, up from 17.4% the prior year and the highest level in data back to 1996, the Labor Department said in its annual report on foreign-born workers. The number of immigrants in the labor force—those working or actively looking for jobs—rose by 1.8 million, or 6.3%, to 29.8 million in 2022. More foreign-born people joined the labor force than native-born Americans, accounting for more than half of the 3.1 million overall gain last year, the report said. There were roughly 164 million workers age 16 or older in the U.S. labor force last year. Sluggish U.S. population growth and accelerating baby-boomer retirements during the pandemic created labor shortages in many industries, increasing job opportunities for foreign-born workers. Overall labor-force participation—the share of people over 16 who are working or seeking work—has recently increased but remains below prepandemic levels. “Any real gains we’re seeing in the labor force are coming from immigrants—they’re a buoy,” said Elizabeth Crofoot, senior economist at Lightcast, a labor-market data firm. Click here to read... [16]

Strategic

A glacial Sino-American thaw

US President Joseph Biden announced a thaw in China’s ties with the US. However, there is much more ice than meets the eye in this “thaw.” When the US Secretary of Commerce Gina Raimondo returned from China last week, she declared that the US “won’t tolerate” China’s ban on Micron chips. Still, from Beijing’s perspective, why should China tolerate restrictions on tech supplies? Then what will happen to China’s purchases of US Treasury bonds, for decades a cornerstone of bilateral ties and now extremely important because of the US budget crisis? Will they go ahead, or will China stop buying them or buy less? How will it impact the US and the global economy? The urgency of Raimondo’s pressing to meet the Chinese side, the rush with which Secretary of State Antony Blinken and Treasury Secretary Janet Yellen moved in the following hours, told China that the US was in big trouble over the budget. Speaking of a thaw and US government officials knocking on Beijing’s door to talk could give the impression in China that America is eager to mend fences with China because it feels weak. Until a couple of months ago, all the messages coming from Washington were of fire and brimstone. Then, in March and April, the US budget crisis began and a problematic agreement had to be found between Democrats and Republicans to deal with it. Click here to read... [17]

US, Australian military staff tour China’s Beijing garrison despite freeze on top brass talks

Military attaches from the United States and Australia were among the dozens invited to tour the People’s Liberation Army’s garrison in Beijing on May 25, the first event of its kind since the pandemic. The tour came as the US said it would not consider lifting sanctions on Chinese Defence Minister Li Shangfu to pave the way for a meeting with US Defence Secretary Lloyd Austin at the Shangri-La Dialogue in Singapore this week. Observers said the invitation from the PLA Ground Force indicated China’s willingness to have regular military exchanges with Western forces. More than 50 military attaches and officers from 43 embassies took part in the tour, the ground force said on its WeChat social media account on May 28. Troops put on demonstrations of boxing, firearms drills and antiterror training, and showed the visitors around the officers’ dormitory. The ground force said the tour was the first it had organised for foreign counterparts since the Covid-19 pandemic, and signalled China’s efforts to promote mutual understanding, deepen mutual trust and forge friendship with other countries under its goal of “peaceful development”. Zhou Chenming, a researcher with the Beijing-based Yuan Wang military science and technology think tank, said the invitation was a message to Washington. Click here to read... [18]

Xi Jinping calls for China, Russia to ‘elevate cooperation’ in talks with Mishustin

Beijing will continue to provide firm support for Moscow’s issues of core interest, Chinese President Xi Jinping told visiting Russian Prime Minister Mikhail Mishustin on May 24. Xi made the remarks during their meeting in Beijing – the latest show of solidarity between the two neighbours that are both under growing pressure from the West. He said that in addition to strengthening cooperation in multilateral platforms such as the United Nations, the Shanghai Cooperation Organisation and the Group of 20, China and Russia should explore “potential” new economic, trade and investment links. “We hope that the two sides will continue to take advantage of … the strong momentum of Sino-Russian cooperation, elevate cooperation in various fields … and continuously enrich the content of the comprehensive strategic cooperative partnership between our two countries in the new era,” Xi told Mishustin, according to Xinhua. “China is ready to work with Russia and countries of the Eurasian Economic Union to promote and connect the Belt and Road Initiative with the union in order to develop and establish a bigger regional market, ensure a more stable and robust global supply chain so [we can] bring real and tangible benefits to the countries in the region,” Xi was quoted as saying. Click here to read... [19]

World leaders congratulate Turkey’s Erdogan on election win

World leaders have congratulated Turkish President Recep Tayyip Erdogan after he won re-election in a historic run-off that posed the biggest challenge to his 20 years in power. Erdogan won Turkey’s presidency with 52.14 percent of the votes, said the head of the Supreme Election Council, Ahmet Yener, on May 28, making the results official. With 99.43 percent of ballot boxes opened, Erdogan’s rival Kemal Kilicdaroglu received 47.86 percent of votes, Yener said. With a gap of more than two million votes between candidates, the rest of the uncounted ballots will not change the result, he added. The elections, in which more than 64 million Turks at home and abroad were entitled to vote, took place against a background of a cost-of-living crisis that saw inflation peak at 85 percent in October and earthquakes in February that killed more than 50,000 people. Erdogan, 69, who came to power in 2003, initially as prime minister, offered a vision of further development, promising to extend the improvements made by his Justice and Development Party (AK Party) government. NATO member Turkey’s longest-serving leader was tested like never before in what was widely seen as the country’s most consequential election in its 100-year history as a post-Ottoman republic. Without formally conceding defeat, Kilicdaroglu said: “My real sadness is about the difficulties awaiting the country.” Click here to read... [20]

U.S. turns to private Japan shipyards for faster warship repairs

The U.S. Navy is studying the use of Japan's private shipyards to maintain, repair and overhaul its warships in a bid to reduce servicing backlogs back home -- an idea that could expand to South Korea, Singapore and the Philippines. If realized, the move would signal a new level of integration with allies and partners as the U.S. maneuvers in the face of a now-larger Chinese naval fleet. U.S. Ambassador to Japan Rahm Emanuel is leading the efforts, speaking with members of Congress and mobilizing embassy staff to reach out to the Japanese government, Nikkei Asia has learned. The Japanese shipbuilding industry is likely to welcome the idea. Japan was once one of the world's most prominent shipbuilding nations but has recently lost market share to China and South Korea. Shipyards have been forced to converge to save costs. A constant flow of repair work from the U.S. Navy would be a boon for the industry. In the past, the Navy has used shipyards in Japan, India and the Philippines to repair logistics ships, such as auxiliary vessels and replenishment oilers. But the new concept envisions expanding this in a fundamental way to include warships, such as destroyers, cruisers and amphibious ships forward-deployed to Japan, a U.S. official told Nikkei Asia. Click here to read... [21]

Japan lawmakers weigh faster arms transfers to allies in a crisis

Japan's ruling coalition will consider easing curbs on the transfer of arms and ammunition to friendly nations during a crisis, as it resumes debate on changes to rules covering defense exports. The proposed exception is designed to speed cooperation between the Japanese Self-Defense Forces and their partners during a crisis in or around Japan, such as an invasion of its remote islands. Allies and partners could deploy forces nearby to help defend Japan, but critics say transferring weapons and ammunition to these troops under current rules would take too long. "It wouldn't be surprising for [Japanese forces] to lend or borrow equipment from Philippine, British or other troops on the ground," Liberal Democratic Party lawmaker Masahisa Sato told parliament's upper house Committee on Foreign Affairs and Defense on May 9. "It makes no sense to be unable to hand over even an extra rifle," said Sato, a retired colonel in the Ground Self-Defense Force. Prior approval from the Ministry of Trade, Economy and Industry is now required to export arms and related components. To assess the risks and ensure transparency, these applications are vetted by members of the National Security Secretariat as well as the foreign and defense ministries. Particularly sensitive shipments also are reviewed by the National Security Council, headed by the prime minister. Click here to read... [22]

Indonesia's Jokowi hosts Iranian leader days after attending G-7

Indonesian President Joko "Jokowi" Widodo met with Iranian counterpart Ebrahim Raisi near Jakarta on May 23, just days after the Southeast Asian country's leader participated in the Group of Seven summit in Hiroshima. Widodo hosted Raisi as a state guest in a ceremony at the presidential palace outside the Indonesian capital. Indonesia and Iran drew closer in trade during the summit, as the two sides signed documents concerning bilateral cooperation. The timing of this meeting suggests that Widodo seeks to highlight a neutral diplomatic agenda that strikes a balance between Russia, Ukraine and the West. During the joint press conference following the summit, the Iranian president said both sides agreed to a goal of lifting bilateral trade to $20 billion annually. Widodo and Raisi confirmed plans to enhance collaboration in energy, medicine, food, science and technology. Widodo has been lobbying other nations to invest in Indonesia, looking to turn his country into an advanced economy by 2045. Indonesia's status as the world's most populous Muslim-majority nation aids in forming business partnerships with Middle Eastern countries. Raisi will be in Indonesia through May 24, during which time he is scheduled to meet with corporate executives. Widodo attended the G-7 summit in Japan as an observer. At the multiday gathering that concluded May 21, international leaders expressed concerns over Iranian weapons flowing to Russia. Click here to read... [23]

Iran's switch of top security official hints at end of nuclear talks

Just two months after Iran and Saudi Arabia resumed diplomatic relations, Tehran's chief architect of the rapprochement is out of his post. Ali Shamkhani stepped down earlier this week as secretary of the Supreme National Security Council of Iran, arguably the nation's most important decision-making organization on defense and national security policies. Iranian President Ebrahim Raisi appointed Gen. Ali Akbar Ahmadian, a veteran of the Islamic Revolutionary Guard Corps, as his replacement. While Shamkhani's resignation may seem at odds with the big diplomatic win he just secured, the switch has been months in the making. Raisi was always expected to pick his own national security adviser. Some say the only reason Shamkhani remained secretary was because of the then-ongoing talks with the Saudis. In Iran, the general framework of foreign policy is determined by Supreme Leader Ayatollah Ali Khamenei. President Raisi technically heads the SNSC, but it is the secretary who has the operational power. Shamkhani, a two-star admiral, was appointed to the position of secretary by Raisi's predecessor, Hassan Rouhani in September 2013. Shamkhani is well known for his opposition to the 2015 Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA). Rumors of Shamkhani potentially being sacked emerged as early as December 2019, as it was clear that he and Rouhani had different opinions over how to revive the JCPOA after then-U.S. President Donald Trump pulled his country from the deal. Click here to read... [24]

China seizing US arms markets in the Middle East

China is poised to break into the Middle Eastern arms market through big deals with Saudi Arabia and Egypt, both of which have traditionally relied on the US for their big-ticket purchases. South China Morning Post (SCMP) reported this month that Saudi Arabia Military Industries (SAMI) is in talks with China North Industries Group Corporation (Norinco) about acquiring China-made Sky Saker FX80 and CR500 vertical take-off and landing (VTOL) drones, Cruise Dragon 5 and 10 loitering munitions and the HQ-17AE short-range air defense (SHORAD) system. The Egyptian Air Force is also reportedly poised to acquire China’s Chengdu Aircraft Industry Group (CAIG) J-10C multirole fighter, with the two sides set to meet during this year’s Langkawi International Maritime and Aerospace Exhibition in Malaysia. SCMP says Egypt plans to acquire 12 J-10Cs, which feature advanced electronic warfare systems and active electronically scanned array (AESA) radar. The 2022 Stockholm International Peace Research Institute (SIPRI) Trends in International Arms Transfers Report notes that, from 2018-2022, Saudi Arabia was the world’s second-largest arms importer, accounting for 9.8% of global arms imports over that period, with the US supplying 78% of Saudi Arabia purchases. The same report notes that Egypt was the world’s sixth-largest arms buyer during the period, accounting for 4.5% of global arms imports, with 34% of its imports coming from Russia. Click here to read... [25]

Taliban clashes with Iranian forces – media

Taliban forces opened fire on Iranian border guards on May 27, killing at least two people, Iranian state media reported. While the situation is now reportedly under control, unverified video footage purportedly shows Taliban fighters moving weapons to the border. The incident took place at the border of Iran’s Sistan and Baluchestan province and the Afghan province of Nimroz. Taliban militants opened fire first, killing at least two Iranian guards, Iran’s IRNA news agency reported, citing police sources. The Iranians responded in kind, inflicting “heavy casualties and serious damage,” IRNA stated. Taliban officials claimed however that the Iranian guards fired first, and that one person on each side was killed, while others were wounded. The dispute is apparently centered on water rights, with both sides claiming access to the Helmand River. While a 1973 treaty guarantees Iran and Afghanistan equal access to the river, Iranian President Ebrahim Raisi has claimed that Taliban gunmen are preventing Iranian scientists from monitoring water levels, and warned earlier this month that Tehran would not “allow the rights of our people to be violated.” Unverified video footage shared on social media purportedly shows Taliban troops using American weapons to assault an Iranian border post. Separate footage shows what appear to be convoys of heavy weapons being towed to the scene of the clashes. Click here to read... [26]

Taliban supreme leader, Qatari PM hold talks in Afghanistan

The Qatari prime minister held talks with the Taliban earlier this month, signalling a new effort by the Taliban to end its international isolation since they took over Afghanistan nearly two years ago. The talks took place on May 12 in the southern city of Kandahar, which included a meeting between the Taliban’s supreme leader, Haibatullah Akhunzada, and Qatari PM Mohammed bin Abdulrahman Al Thani. However, no details or official readout from the meeting have been released. According to state outlet Qatar News Agency, Al Thani’s visit came in the context of the country’s “political role in communicating with various parties in addition to facilitating the relations between the caretaker government and the international community and seeking to achieve security and prosperity for the Afghan people”. According to Reuters news agency, a diplomatic source said United States President Joe Biden was also briefed on the talks between the two countries. “He had a brief meeting with Haibatullah [Akhunzada]. This is very important because this was the only time that an international leader has met Haibatullah,” Al Jazeera’s Osama Bin Javaid said. “They discussed a lot of issues, especially security. The Islamic Emirate of Afghanistan’s commitments to the international community also came up. In conversation with some Taliban officials, there were also discussions about women’s rights and reopening schools,” he added. Click here to read... [27]

U.A.E. Says It Exited U.S.-Led Naval Force

The United Arab Emirates said May 31 that it had pulled out of a U.S.-led multinational security force that works to counter Iran in the Middle East, where the Persian Gulf nation has expressed disappointment with American efforts to deter Tehran. In a release on its state news service, the U.A.E. said that it withdrew from the American-led coalition two months ago as part of its assessment of “effective security cooperation” in the Middle East. The statement didn’t explain why. Led by the top U.S. admiral in Bahrain, the coalition—known as the Combined Maritime Forces, or CMF—brings together 38 nations that work together to combat Iranian attacks on commercial ships, weapons smuggling and piracy. The coalition, which includes the U.K., France, Saudi Arabia, Qatar and Germany, is the largest such maritime security force in the world. Two months ago, U.S. officials said, the U.A.E. pulled its representatives from the coalition’s headquarters in Bahrain, but didn’t indicate that it was doing so because of any dissatisfaction with American-led security efforts. Cmdr. Tim Hawkins, a spokesman for the U.S. Navy’s Bahrain-based Fifth Fleet, which oversees the military coalition, said Wednesday that the U.A.E. is still a member of the group and that participation ebbs and flows, depending on various needs. “CMF remains a multinational partnership of 38 nations, of which the U.A.E. is one,” he said. “Participation is typically rotational for many of our partners.” Click here to read... [28]

Pentagon reveals value of military aid pumped into Ukraine

The so-called Ukraine Defense Contact Group has committed almost $65 billion in military aid to prop up Kiev in the conflict with Moscow, US Defense Secretary Lloyd Austin has revealed. The Pentagon boss made the estimate during the 12th meeting of the group, which brings together all 31 NATO nations, as well as a handful of ‘non-aligned’ countries. Washington is “committed to standing with Ukraine for the long haul,” Austin announced. “In total, the Contact Group has committed nearly $65 billion in security assistance,” he said, claiming that Ukraine’s backers remain “as united as ever.” “And, last week, President Biden announced that the United States will support a joint effort with our allies and partners to train Ukrainian pilots on fourth-generation aircraft, including F-16s. We hope this training will begin in the coming weeks,” Austin declared. Apart from supplying modern combat aircraft to Kiev, the US is now focusing on providing Ukraine with “additional air-defense systems and munitions,” he said. The air defenses are “crucial” for “protecting Ukraine’s skies and civilian infrastructure from Russia’s assault,” he added. Moscow has consistently said it has been exclusively targeting military or dual-purpose sites in the country. It has also accused Kiev of subjecting cities near the frontlines to indiscriminate artillery and rocket attacks, which have resulted in multiple civilian casualties over the course of the conflict. Click here to read... [29]

China says South Korea agrees to boost semiconductor cooperation, while Seoul stays quiet on talks

China says it has reached a consensus with South Korea on bolstering cooperation in semiconductors, amid efforts by Washington to rally allies against Beijing in a tech war. In talks on the sidelines of an Asia-Pacific Economic Cooperation (Apec) trade ministers’ meeting in Detroit, Chinese Commerce Minister Wang Wentao and South Korean Trade Minister Ahn Duk-geun agreed to strengthen dialogue and cooperation in semiconductor supply chains, according to China’s Commerce Ministry. However, Seoul made no mention of discussions between the trade chiefs about the semiconductor sector, noting only that Ahn requested support from Beijing to stabilise the supply and demand of key raw materials and parts. The talks were the two ministers’ first interaction in about a year and came just weeks after South Korean President Yoon Suk-yeol sparked outrage in Beijing for suggesting that “the Taiwan issue is not simply an issue between China and Taiwan”. South Korea is a powerhouse in the global semiconductor industry, with major companies like Samsung and SK Hynix making the nation a crucial player in both the memory and processing chip markets. But its foreign policy under Yoon – including on China – has been shifting more towards the United States. During Yoon’s state visit to the US last month, South Korea and the US agreed to improve public and private cooperation on leading-edge semiconductors, according to a joint statement. Click here to read... [30]

Pyongyang seeks to portray rocket as science effort by admitting failure: experts

North Korea's unusually prompt admission of the failure of its purported reconnaissance satellite launch shows the regime's effort to characterize the project as a scientific endeavor and not part of its missile program as suspected by Seoul, Washington, Japan and many other governments, according to experts, June 01. Less than three hours after May 31's failed rocket launch, North Korea admitted the failure and vowed in a message to the world to step up efforts to place a new one in orbit soon, although it did not disclose the botched attempt to its own people. "The regime appeared to highlight that it has the technology required for a satellite launch and it is sincere about that effort, providing a counterargument against claims that it was just part of its weapons program," Cha Du-hyeogn, a senior researcher at the Asan Institute for Policy Studies, a think tank, said. "North Korea would need to justify the rocket test as some countries are expected to push for additional sanctions or resolutions through the U.N. Security Council." This is why Pyongyang, in a rare move, released pictures of the failed launch, said Cheong Seong-chang, an expert on North Korea at the Sejong Institute, a think tank. "In the photos, the rocket projectile looks clearly different from the one used for the ICBM (intercontinental ballistic missile) tests," he noted. Click here to read... [31]

Health

China, Once Pioneer of Zero Covid, Shrugs Off Looming Wave

Roughly this time last year, Beijing was a Covid-19 fortress teetering on the edge of a lockdown. As daily case counts crept up to around 100 in this mega-capital of more than 20 million people, residents cleared out grocery stores, lined up for near-daily testing and postponed travel out of the city due to the risk that they wouldn’t be allowed back in. Today, Beijing and the rest of China are gearing up for a new Covid-19 wave that a top Chinese medical expert says could infect 65 million people a week by late June. Office workers are already calling in sick, many of them catching the virus for the second time in six months. And yet the mood this time is decidedly blasé. Restaurants, train stations, concert venues and soccer stadiums are teeming. Tourists clutching umbrellas in Tiananmen Square seem more worried about sunburn than Covid-19. One of the few outward signs of the latest wave is that more people are wearing masks on the streets—but even then mask-wearing is optional and many are left to dangle around the chin. The contrast points to the dramatic changes in China’s approach to the virus that have completely altered daily life in the country. As the government now races to rewrite some of the history of its handling of Covid-19, many Chinese are eager to move on. Click here to read... [32]

South Africans blame gov’t as cholera outbreak kills 15

As deaths from cholera this week rose to 15 in Gauteng, South Africa’s most populous province, many residents are blaming the government for a lack of clean water for drinking and other household uses. The health department in Gauteng declared a cholera outbreak on May 21 in Hammanskraal, an area about 50 kilometres (31 miles) north of its administrative capital Pretoria, in the city of Tshwane. Almost 100 people have been seen at hospitals and 37 have been admitted to wards, the city government said on May 22, warning residents of Hammanskraal and surrounding areas not to drink tap water. There are now 41 cases confirmed nationwide, including 34 in Gauteng province, one in Limpopo province and six in Free State, a health department spokesperson said. The cases in Free State province are not connected to the others, he added. In Hammanskraal, resident Kagiso Sadiki said he could not remember a time when Hammanskraal’s tap water was fit for consumption. His 53-year-old cousin Michael Sadiki died within a week of falling ill. The tap water is brown and dirty, the 37-year-old told reporters. “Everybody has the right to have clean water,” Sadiki said, visibly distressed, sitting under a lemon tree. “I hope my cousin’s death is not in vain”. Click here to read... [33]