Global Developments and Analysis: Weekly Monitor (18-24 December 2023)

Economic

US Aims Tougher Sanctions at Banks in New Bid to Hurt Putin

The US targeted banks that facilitate payments for Russia’s military-industrial complex, the latest in a series of restrictions that have tried — and so far failed — to cripple President Vladimir Putin’s ability to fund his invasion of Ukraine. President Joe Biden was set to amend two executive orders Dec 21 in a move that will for the first time allow the US to impose so-called secondary sanctions over the Ukraine war, opening the door to financial penalties on banks for doing business with firms already sanctioned for their links to Russia, whether they know it or not. Deputy Treasury Secretary Wally Adeyemo said the measures give the US the ability to target the financial institutions directly in cases where officials don’t get cooperation from foreign governments on enforcing sanctions. “They’re not going through big companies in these countries,” Adeyemo said in an interview on CNBC. “They’re going through small firms to get things like microelectronics, and machine tools and engine parts. But all of these companies still have to use the financial system. What this executive order gives us the ability to do is to target smaller institutions that may be unwilling to or wittingly trying to get around our sanctions.” Click here to read… [2]

U.S. Shatters Oil Production Records in 2023

The U.S. set a new annual oil production record on December 15, based on data from the Energy Information Administration. Although the official monthly numbers from the EIA won’t be released for a couple of months, we can calculate that a new record has been set based on the following analysis. For reference, the previous record was set in 2019, the year before the Covid-19 pandemic impacted the oil industry. Total U.S. crude oil production in 2019 was 4.49 billion barrels (source), or 12.3 million barrels per day (BPD). Then the pandemic hit, and oil production fell in 2020 and 2021, before rebounding in 2022. The EIA reports oil production numbers in multiple places. The U.S. Field Production of Crude Oil shows monthly totals and averages, but they are always a couple of months behind. For example, as I write this on December 14, the most recent month posted is September, and U.S. oil production up until then stood at 3.50 billion total barrels. However, we can also find weekly production numbers in the EIA’s Petroleum Status Report published every Wednesday. A table from that report called U.S. Petroleum Balance Sheet shows the status of U.S. oil production, inventories, imports, etc. for the previous week, as well as the four-week average. Click here to read… [3]

Israeli Economy Reels From Gaza Conflict as Labor Pool Shrinks

Israel’s war in the Gaza Strip is transforming its economy and that of the West Bank. The decision to bar more than 100,000 Palestinian workers from entering Israel has shrunk the pool of low-cost labor in a country of roughly nine million people that is known for relatively high wages and strict immigration laws that make it harder for non-Jews to live in Israel. At the same time, the Israeli military has called up roughly 400,000 reservists and officials estimate that 250,000 Israelis have been relocated at least temporarily from their homes, particularly from areas seen as potentially vulnerable to attack, preventing many from going to work. About 20% of Israeli employees aren’t working due to military duty or relocation, according to Israel’s Ministry for Economy and Industry, which estimated that the cost to the economy due to the absence of Israeli workers had reached around 13 billion shekels, or roughly $3.6 billion, by mid-November. In Israel’s tech sector, a driving force in its economy, an average of 10% to 15% of the workforce has been called up for reserve duty, according to an estimate by the Israel Innovation Authority. “Businesses aren’t operating as smoothly, people aren’t spending as much money. There’s an accumulated impact to this,” said Yossi Mekelberg, a Middle East analyst at Chatham House, a think tank based in London. Click here to read… [4]

Xi Jinping ‘personally’ steering China’s reform process, state media report says

State media has highlighted President Xi Jinping’s leading role in the country’s reform process, as the ruling Communist Party marks the start of China’s economic revival more than four decades ago. In a report on Dec 17, official news agency Xinhua said Xi had taken the lead in the “overall design, coordination, supervision and implementation” of reforms. He did so as head of the top party group on systemic reform – a body that was initially a leading group and later upgraded to a top-level commission. Citing unnamed “authoritative sources”, the report said Xi had “carefully reviewed each draft of major reform plans, making revisions word by word and sentence by sentence”. The report said Xi had chaired 70 meetings with the leading group and commission on a series of major reform plans since the 18th party congress in November 2012, when he took power. This year marks the 45th anniversary of China’s reform and opening up policy, after then-leader Deng Xiaoping set the country on the road to economic transformation at a meeting of the party’s Central Committee held from December 18 to 22, 1978. The Central Committee pledged further reforms and laid out dozens of market-oriented measures at a meeting in November 2013, a year after Xi took office. Click here to read… [5]

China's yuan rises to 4th most used currency in global settlements

China's currency was used more than Japan's for international payments in November for the first time since January 2022, capturing the fourth-largest share. The data comes from the Swift international payment service. The use of the yuan for oil and other transactions with Russia is increasing due to sanctions from the West in the wake of its invasion of Ukraine. For trading in November, the yuan's share among all currencies was 4.61%, the highest since the earliest data available in 2015. Heading the list was the U.S. dollar with 47.08%, followed by the euro with 22.95% and the British pound with 7.15%. The yen's share was 3.41%. China has been pushing for payments in currencies other than dollars in trade with Russia, the Middle East and South America. "It appears that other emerging countries are also using the yuan when importing Russian crude oil," said Toru Nishihama, chief economist at Dai-ichi Life Research Institute. Looking at trends in yuan payments by country or region outside mainland China, Hong Kong accounted for about 80%. "If you exclude transactions with Hong Kong, the yuan's presence as an international currency is small," said Naoki Tsukioka, chief economist at Mizuho Research & Technologies. Click here to read… [6]

China sets final rules for Alipay, WeChat Pay and their peers

China has approved regulations on nonbank payment institutions, seeking to curb risks in the booming sector by tightening supervision over digital payment service providers including Alipay and WeChat Pay. The regulations on the supervision and administration of nonbank payment institutions, approved by the State Council in November, will come into effect on May 1, a Sunday government announcement shows. A draft version of these regulations was released in January 2021 for public comment. The new rules seek to address the burgeoning growth of major players in China's digital payment industry while strengthening blanket oversight for the entire sector, which has boomed over the past decade. Payment service providers Alipay and WeChat Pay became digital behemoths and integral to most Chinese people's lives as regulatory oversight lagged. China had 186 nonbank payment institutions as of Dec 18, central bank data shows. Part of the rationale for creating the regulations was to bring the whole nonbank payment sector under legal and standardized rules, the Ministry of Justice and the People's Bank of China (PBOC) said in a Q&A accompanying the announcement. The directives also aim to promote healthy competition and development of the industry, and guide nonbank payment institutions to better serve the real economy and protect users' rights, according to the two agencies. Click here to read… [7]

China import concerns spur U.S. review of chip supply chain

The U.S. Department of Commerce said Dec 21 it will launch a survey of the U.S. semiconductor supply chain and national defense industrial base to address national security concerns from Chinese-sourced chips. The survey aims to identify how U.S. companies are sourcing so-called legacy chips -- current-generation and mature-node semiconductors -- as the department moves to award nearly $40 billion in subsidies for semiconductor chip manufacturing. The department said the survey, which will begin in January, aims to "reduce national security risks posed by" China and will focus on the use and sourcing of Chinese-manufactured legacy chips in the supply chains of critical U.S. industries. A report released by the department on Dec 21 said China has provided the Chinese semiconductor industry with an estimated $150 billion in subsidies in the last decade, creating "an unlevel global playing field for US and other foreign competitors." Commerce Secretary Gina Raimondo said that "over the last few years, we've seen potential signs of concerning practices from [China] to expand their firms' legacy chip production and make it harder for U.S. companies to compete." China's embassy in Washington did not immediately comment. Raimondo said last week that she expects her department to make around a dozen semiconductor chip funding awards within the next year, including multibillion-dollar announcements that could drastically reshape U.S. chip production. Click here to read… [8]

China bans export of rare earths processing tech over national security

China, the world’s top processor of rare earths, banned the export of technology to extract and separate the critical materials on Dec 21, the country’s latest step to protect its dominance over several strategic metals. Rare earths are a group of 17 metals used to make magnets that turn power into motion for use in electric vehicles, wind turbines and electronics. While Western countries are trying to launch their own rare earth processing operations, the ban is expected to have the biggest impact in so-called “heavy rare earths,” used in EV motors, medical devices and weaponry, where China has a virtual monopoly on refining. “This should be a clarion call that dependence on China in any part of the value chain is not sustainable,” said Nathan Picarsic, co-founder of the geopolitical consulting firm Horizon Advisory. China’s commerce ministry sought public opinion last December on the potential move to add the technology to its “Catalogue of Technologies Prohibited and Restricted from Export.” It also banned the export of production technology for rare earth metals and alloy materials as well as technology to prepare some rare earth magnets. The catalogue’s stated aims include protecting national security and public interest. China has significantly tightened rules guiding exports of several metals this year, in an escalating battle with the West over control of critical minerals. Click here to read… [9]

Biden believes U.S. Steel sale to Japanese company warrants ‘serious scrutiny,’ White House says

President Joe Biden believes “serious scrutiny” is warranted for the planned acquisition of U.S. Steel by Japan’s Nippon Steel, the White House said Dec 21 after days of silence on a transaction that has drawn alarm from the steelworkers union. Lael Brainard, the director of the National Economic Council, indicated the deal would be reviewed by the secretive Committee on Foreign Investment in the United States, which she participates in and includes economic and national security agency representatives to investigate national security risks from foreign investments in American firms. She said in a statement that Biden “believes the purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.” “This looks like the type of transaction that the interagency Committee on Foreign Investment Congress empowered and the Biden administration strengthened is set up to carefully investigate,” she said. “This administration will be ready to look carefully at the findings of any such investigation and to act if appropriate.” Under the terms of the approximately $14.1 billion all-cash deal announced Dec 18, U.S. Steel will keep its name and its headquarters in Pittsburgh, where it was founded in 1901 by J.P. Morgan and Andrew Carnegie. It will become a subsidiary of Nippon. Click here to read… [10]

China seeks exemption from US sanctions for Russian LNG – Reuters

China’s state energy majors CNOOC and China National Petroleum Corp (CNPC) have both asked the US government for exemptions from sanctions on a new Russian liquefied natural gas (LNG) export plant. They are seeking to prevent disruption to crucial fuel flows, Reuters reported on Dec 22, citing people with direct knowledge of the matter. The Arctic LNG 2 energy project, which is located on the region’s Gyda Peninsula, is operated by Russia’s largest independent LNG producer, Novatek. It will feature three LNG trains, with a total annual production capacity of 19.8 million tons. The first train was launched in July, while the remaining two are scheduled to commence in 2024 and 2025. The US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on the Russian gas enterprise in early November, banning third countries in Asia and Europe from purchasing LNG produced by the plant when it starts operating in 2024. “This is a standard response as an equity partner communicating with OFAC to protect our interest in the project,” a Beijing-based industry official told the outlet. China is the world’s biggest buyer of LNG, and US sanctions threaten deliveries that are considered vital for heating homes and fueling the industry in the country. CNOOC and CNPC each have a 10% stake in the Arctic LNG 2 plant, while Novatek has a 60% holding. Click here to read… [11]

EU sets date for Russian diamond ban

The EU will impose a ban on the direct or indirect import, purchase, or transfer of diamonds from Russia from January 1 onwards, the European Council (EC) has announced. The measure is part of the bloc’s twelfth package of economic sanctions against Moscow. According to the Dec 18 press release, the prohibition applies to diamonds originating in Russia, diamonds exported from Russia, diamonds transiting Russia and Russian diamonds when processed in third countries. The EC said that a direct ban applies to non-industrial natural and synthetic diamonds, as well as diamond jewelry. “Furthermore, an indirect import ban of Russian diamonds when processed (i.e. cut and/or polished) in third countries, including jewelry incorporating diamonds originating in Russia, will be phased in progressively as of 1 March 2024 and be completed by 1 September 2024,” it declared. According to the release, the phasing-in of indirect import bans was justified by the need “to deploy a traceability mechanism that enables effective enforcement measures and minimizes disruptions for the EU market.” The ban on Russian diamonds is part of a G7 effort to develop an “internationally coordinated diamond ban that aims at depriving Russia of this important revenue source,” the EC concluded. Belgium had previously stalled the efforts of Western allies to bar Russian diamonds, warning that Antwerp – through which 90% of the world’s precious stones pass – would risk losing business to Dubai if the embargo was passed. Click here to read… [12]

Biden cancels UK trade deal – media

The US will not go through with plans for a “foundational” trade agreement with the UK, Politico reported on Dec 20, citing sources close to the discussions who spoke on condition of anonymity. According to the news outlet, a preliminary version of the deal had been prepared by the United States Trade Representative’s (USTR) office earlier this year. It covered subjects such as digital trade, labor protections and agriculture, according to documents seen by Politico. Talks on the deal had been expected to start by the end of the year and wrap up ahead of next year's elections in both the UK and US. The proposed agreement was reportedly far from a traditional free trade deal, but was pitched as a road map to eventually securing one. However, sources claim that US President Joe Biden decided to shelve the agreement after some of its provisions met with criticism in Congress. Lawmakers reportedly argued that the pact in its proposed form did not benefit the American public, especially farmers and workers. “Does this improve the lot of the farmers in Iowa? Does this help the US economy? And if it doesn't, they're not going to do it,” one of the sources said, summarizing the reaction to the proposed agreement at a recent meeting between the USTR and lawmakers. Click here to read… [13]

Cyprus, Israel Working on Start of Gaza Maritime Aid Corridor

Cyprus and Israel are working on the final details of an initiative to establish a maritime aid corridor to Gaza from Cyprus, the foreign ministers of the two countries said. “As the humanitarian needs escalate so does the urgency of the need to act,” Cyprus Foreign Minister Constantinos Kombos said in the port city of Larnaca after meeting his Israeli counterpart Eli Cohen, according to an audio tape of his comments sent by the Cyprus government press office. The Cyprus plan provides for setting up a logistical hub for the safe provision of sustained, high volumes of humanitarian assistance to civilians in Gaza through a dedicated one-way maritime corridor, Kombos said. Cyprus, Israel and other partners in the region are promoting the initiative to facilitate the transfer of humanitarian assistance to Gaza “in an organized and well-inspected manner,” Cohen said. Israeli President Isaac Herzog said Dec 19 his country is prepared to agree to a second humanitarian pause in fighting in exchange for the return of more hostages held by Hamas. “I can reiterate the fact that Israel is ready for another humanitarian pause and additional humanitarian aid in order to enable the release of hostages,” Herzog told a group of ambassadors. Click here to read… [14]

Iranian Cities Overwhelmed by Influx of Climate Migrants

Record temperatures, prolonged droughts, and the drying up of rivers and lakes are displacing tens of thousands of Iranians each year, experts say. Many of the climate migrants are farmers, laborers, and fishermen who are moving with their families from the countryside to major urban areas in Iran in search of alternative livelihoods. Iranian officials have blamed worsening water scarcity and rising desertification on climate change. But experts say the crisis has been exacerbated by government mismanagement and rapid population growth. While the exact number of climate migrants is unknown, Iranian media estimated that around 42,000 people in 2022 were forced to migrate due to the effects of climate change, including drought, sand and dust storms, floods, and natural disasters. The estimated figure for 2021 was 41,000. Observers say the real figures are likely much higher. Experts say a growing number of Iranians are likely to leave rural areas as more areas of Iran -- where most of the land is arid or semiarid -- become uninhabitable every year. "It is visible because Iran is very dry, there is little rainfall, and a significant part of the country is desert," Tehran-based ecologist Mohammadreza Fatemi told RFE/RL. "As a result, the slightest change in the climate affects the population." Click here to read… [15]

The Era of Big Taxes Is Upon Us

Rich countries are raising more money from taxpayers than they have in decades to finance a burst of state spending as surging interest rates make borrowing less attractive. Tax revenues have risen to record levels as a share of economic output in a number of major economies, including France, Japan and South Korea, according to data published by the Organization for Economic Cooperation and Development, the club of mainly rich countries. The increases are worth hundreds of billions of dollars in additional revenue for governments that are navigating an array of new spending needs, from military priorities to industrial policy. They underline a trend toward big government, amplified by the Covid-19 pandemic and fueled by national-security concerns in a world of geopolitical divisions, the need to care for aging populations and the fight against climate change. In the U.S., tax receipts at all levels of government climbed to nearly 28% of GDP last year, up from 25% in 2019 and the highest level since at least 1965, aside from a brief period of budget consolidation during the Clinton administration. During the late 1990s, the U.S. turned budget deficits into surpluses with tax increases, spending restraint and fast economic growth. In France and Germany, tax receipts have increased by around 1 percentage point of GDP since 2019 from already high levels, to about 46% and 39% of GDP respectively. In both countries, tax-to-GDP ratios are at the highest levels since records began in 1965. Click here to read… [16]

The trouble with Malaysia’s chip industry

Semiconductors are quickly becoming both the new oil and a new source of global conflict. Today, everything that requires computing power has chips fitted, from weapons to watches and cars. The artificial intelligence era is only just beginning, which will inevitably lead to even greater use of semiconductor chips. Malaysia is right in the middle of the global chip-making supply chain. The electrical and electronics sector comprises about 7% of Malaysia’s GDP, with semiconductor devices and electronic integrated circuits alone making up a quarter of total exports, totaling 387 billion ringgit (US$83.5 billion) in export value in 2022. As the world’s sixth largest semiconductor exporter, Malaysia holds 7% of the global market share and contributed to 23% of US semiconductor trade in 2022. Malaysia is welcoming more investment into the semiconductor value chain. The country has an established presence in chip assembly, packaging and testing as well as electronics manufacturing services, producing 13% of global back-end semiconductor output. The New Industrial Master Plan (NIMP) 2030 aspires to see more front-end activities such as integrated circuit design, wafer fabrication, semiconductor machinery and equipment manufacturing in Malaysia. Recent announcements of investment by Intel ($7 billion), Infineon ($5.5 billion) and Texas Instruments ($3.1 billion) show that Malaysia is well positioned to scale and engage in more complex activities. Click here to read… [17]

Strategic

U.S. and Chinese top military officials spoke on Dec 21: Pentagon

The top U.S. military officer held a virtual meeting with his Chinese counterpart on Dec 21, the Pentagon said, in the first such conversation in over a year amid hopes by U.S. officials that it could lead to a broader restoration of ties between the militaries. The video teleconference followed an agreement between U.S. President Joe Biden and Chinese President Xi Jinping last month to resume military-to-military ties severed by Beijing after then-House of Representatives Speaker Nancy Pelosi visited self-ruled Taiwan in August 2022. U.S. Air Force General CQ Brown, chairman of the Joint Chiefs of Staff, and General Liu Zhenli of the China's People's Liberation Army touched on "a number of global and regional security issues," Brown's office said. Liu is the Chief of the Joint Staff Department of the Central Military Commission (CMC), the military body responsible for China's combat operations and planning. Pentagon officials say communication between the two militaries is crucial to preventing a miscalculation from spiraling into conflict. "Gen. Brown discussed the importance of working together to responsibly manage competition, avoid miscalculations, and maintain open and direct lines of communication," Brown's office said. "Gen. Brown reiterated the importance of the People's Liberation Army engaging in substantive dialogue to reduce the likelihood of misunderstandings." Click here to read… [18]

Taiwan presidential race tightens in final weeks, polls show

Taiwan presidential front-runner Lai Ching-te's lead over his main opposition rival has narrowed significantly, setting the stage for a close race in the final weeks before the pivotal vote. Lai's ticket, representing the ruling party, leads with 37.3% of support followed by Hou Yu-ih's of opposition Kuomintang (KMT) with 33.4%, according to a survey conducted between Dec. 19 and Dec. 21 by pollster My Formosa. Ko Wen-je of the Taiwan People's Party trails with 17.7%. As recently as Dec. 1, Lai led with 37.8% and Hou was at 29.5%, both ahead of Ko's 17.7%, meaning Hou has gained on Lai over the last three weeks. Earlier this month, a poll commissioned by pro-KMT newspaper United Daily News showed Lai and Hou tied at 31%. "KMT has been catching up rapidly since late November after the end of opposition unity talks," said Wen-Ti Sung, a nonresident fellow at the Atlantic Council think tank. The tightening race means candidates will be campaigning intensely in the run-up to the vote. Lai, Hou and Ko are competing in the Jan. 13 presidential race as Taiwan chooses its next head of state and lawmakers while facing China's aggression. President Tsai Ing-wen's government is fending off Chinese military incursions amid recent reports of election meddling and disinformation attacks. Click here to read… [19]

Japan's Patriot-missile transfer to U.S. stuns Indo-Pacific watchers

Japan's decision to ship Patriot missiles to the U.S. to help backfill stocks of air-defense systems for Ukraine has surprised analysts focusing on Indo-Pacific affairs. Many have questioned the rationale of taking weapons out of the Indo-Pacific for a battle in Europe when the administration of U.S. President Joe Biden has said all along that China is the pacing threat. The transfer of Patriots was a request from the U.S. side. This suggests that the Biden administration has concluded that a Chinese invasion of Taiwan is not imminent. While many in Washington agree to that assessment, some oppose shifting attention away from the Indo-Pacific. The government of Japanese Prime Minister Fumio Kishida "has made a fundamental error in going along with the Biden administration's prioritization of Europe," said Elbridge Colby, a former U.S. deputy assistant secretary of defense for strategy and force development. "We have sent weapons that we cannot replace in a timely fashion, we have distracted the attention of the defense industrial base and we've spent over $100 billion on Ukraine," said Colby, co-founder and principal at Washington strategic think tank The Marathon Initiative. "Japan cannot say, 'We should go along with Ukraine and we'll wait our turn.' Asia needs to come first," Colby, said. "That is the rhetorical position of the U.S., but it has to be the actual position." Click here to read… [20]

Offices of LDP’s Abe, Nikai factions searched in funds scandal

Investigators searched the offices of the ruling Liberal Democratic Party’s Abe and Nikai factions on Dec. 19 over suspicions they failed to report large amounts of revenues gained from their fund-raising parties. More than 10 investigators from the Tokyo District Public Prosecutors Office’s Special Investigation Department entered each of the two offices around 10 a.m. Additional investigators later joined the searches. Prosecutors have questioned faction officials in charge of accounting on a voluntary basis to determine if the two factions violated the Political Fund Control Law. They decided to search the factions’ offices to clarify the chain of command and other details, sources said. “We deeply regret that the situation has reached such a stage,” LDP Secretary-General Toshimitsu Motegi said at a news conference on Dec. 19. “We take it seriously and will take necessary measures while keeping a close eye on future investigations.” In a statement, the Abe faction said: “We sincerely apologize for eroding trust in politics. We will provide utmost cooperation to the investigation and respond to it with sincerity.” The Nikai faction expressed the same sentiments in a statement issued in the name of its leader, Toshihiro Nikai, a former LDP secretary-general. “We sincerely apologize for having caused concern and inconvenience. We will sincerely cooperate with requests from authorities and make efforts to resolve the matter,” the statement said. Click here to read… [21]

Japan, S. Korea, U.S. launch real-time sharing of N. Korean tests

Japan, the United States and South Korea booted up on Dec. 19 a new system to detect and share information on Pyongyang’s missile launches in real time in response to the growing North Korean military threat. In a joint statement, the three countries also announced plans for a multi-year trilateral exercise starting next year. Previously, the United States disseminated North Korean missile test data with Tokyo and Seoul separately, not through simultaneous trilateral cooperation. The new mechanism is expected to allow Japan to collect more accurate data immediately after missile launches, thanks to South Korea’s closer proximity to launch sites. On the same day, Pyongyang’s Korean Central News Agency announced that the country had test-fired a Hwasong-18, a solid-fuel intercontinental ballistic missile, in apparent reference to a projectile launched from a Pyongyang suburb toward the Sea of Japan on the morning of Dec. 18. The state media outlet said the launch sent a strong warning to the United States and South Korea, which had just reaffirmed their commitment to deterring North Korea at the Nuclear Consultative Group meeting in Washington on Dec. 15. Click here to read… [22]

Landmark national security trial opens in Hong Kong for prominent activist publisher Jimmy Lai

A landmark national security trial opened Dec 18 in Hong Kong for prominent activist publisher Jimmy Lai, who faces a possible life sentence if convicted under a law imposed by Beijing to crush dissidents. Lai, 76, was arrested in August 2020 during a crackdown on the city's pro-democracy movement under the sweeping national security law enacted following huge protests four years ago. He is charged with colluding with foreign forces to endanger national security and conspiring with others to put out seditious publications. The closely watched case — tied to the now-shuttered pro-democracy newspaper Apple Daily that Lai founded — is widely seen as a trial of press freedom and a test for judicial independence in the Asian financial hub. China promised that the former British colony could retain its Western-style civil liberties for 50 years after returning to Chinese rule in 1997. But in recent years, the Hong Kong government has severely limited free speech and assembly and virtually eliminated political opposition under the rubric of maintaining national security. Many leading activists were arrested, silenced or forced into self-exile. Lai’s trial is Hong Kong’s first on charges of collusion with foreign forces. It also targets three companies related to Apple Daily. Lai smiled at his supporters after he walked into the courtroom. Click here to read… [23]

Philippines Seeks Fresh Strategy in Countering China in Sea Feud

The Philippines should revamp its approach in dealing with Beijing’s aggression in the South China Sea as “traditional methods of diplomacy” are being disregarded and current efforts are heading in a “poor direction,” according to President Ferdinand Marcos Jr. “We have to come up with a new concept, a new principle, a new idea so that we move, as I say, we move the needle the other way,” Marcos said in a statement on Dec 19. “We’ve gone down the wrong road,” he said, as he rallied allies to come out with a joint position, in remarks first made before the Japanese media on Dec 16. China and the Philippines have been locked in an escalating territorial spat in the South China Sea, a key trade corridor with huge energy potential that both sides want to take advantage of. The Philippines has been filing diplomatic protests, summoning China’s envoy after increasingly tense encounters in contested waters and also calling out China’s coast guard. The Southeast Asian nation has also floated the idea of filing another case against Beijing, and holding separate talks with neighbors for a sea code. China has maintained its maritime actions are lawful. Marcos, who discarded his predecessor’s non-confrontational approach in the South China Sea when he took office last year, suggested increased involvement among other stakeholders that will promote peace and also resolve the issue sooner rather than later. Click here to read… [24]

UK to sign naval ‘security pact’ with Ukraine – Telegraph

The UK will try to help the Ukrainian Navy strengthen its presence in the Black Sea as part of a new security pact, The Telegraph has reported. A ten-year agreement between London and Kiev will be signed in the coming weeks, the British newspaper has claimed. The UK Defense Ministry announced last week that it would provide two mine-clearing ships to Ukraine as part of a new maritime coalition that also involves Norway. Britain has been one of Ukraine’s most enthusiastic backers in the conflict with Russia, furnishing it with weapons, military equipment, and training to the tune of around £4.6 billion ($5.7 billion). In its report on Dec 18, The Telegraph cited a British-Ukrainian Memorandum of Understanding (MoU) which purportedly aims to “keep [Kiev] in the fight” by providing military support focused on naval assets, intelligence, and financial aid. Anonymous defense sources told the newspaper that Britain would supply land- and air-based weaponry, with the aim of making Ukrainian forces more “interoperable” with NATO. The Royal Navy has been training Ukrainian de-mining crews and drilling commandos for amphibious raids for some time. Last year, London handed over ship-based versions of the Brimstone missile to Kiev. Under the new accord, Britain will reportedly commit to continue its Operation Interflex training program, which has already prepared 30,000 Ukrainian troops for war. Click here to read… [25]

Pentagon concerned with cost of repelling Houthi attacks – Politico

Pentagon officials are worried about the growing cost to the US of countering Yemeni Houthi drone and missile attacks in the Red Sea, Politico reported on Dec 20. The report comes after several major freight companies suspended travel through the route, citing concerns over the safety of their vessels. The US Navy has shot down 38 drones and several missiles over the Red Sea in the past two months, according to the US Department of Defense. On Dec 16, the US destroyer USS Carney shot down 14 drones – suspected to be launched from Yemen – in one attack alone. Houthi militants have stepped up attacks on shipping in the region amid the escalating Israel-Hamas conflict in Gaza. With the death toll among the Palestinians reportedly nearing 20,000, armed groups have vowed to continue their assaults until “the Israeli aggression against” their “steadfast brothers in the Gaza Strip stops.” Politico reported that the cost of using US naval surface-to-air missiles is increasingly concerning, quoting sources from the Department of Defense. Each munition is reportedly worth an estimated 1,000 times more than the drones they’re used against. “That quickly becomes a problem because the most benefit, even if we do shoot down their incoming missiles and drones, is in their favor,” said Mick Mulroy, a former US Defense Department official and CIA officer. Click here to read… [26]

President el-Sisi declared victorious in Egypt election

Egypt’s President Abdel Fattah el-Sisi has secured a third term as leader of the Middle East’s most populous nation, officials said, after the counting of votes in the election held between December 10 and 12 was finalised. Sisi won 89.6 percent of the vote, the National Elections Authority said on Dec 18. Over 39 million Egyptians cast their ballots for Sisi, a former army chief who has ruled the most populous Arab country for a decade. The vote, the result of which was in little doubt, took place as Egypt dealt with various crises, including the Israel-Hamas war in neighbouring Gaza and the country’s worst-ever economic crisis. Despite Egypt’s afflictions, a decade-long crackdown on dissent has eliminated any serious opposition to Sisi, the fifth president to emerge from within the ranks of the military since 1952. Sisi was running against three other candidates, none of whom were high profile. The most prominent potential candidate ended his run complaining that his campaign had been impeded and dozens of his supporters arrested. Runner-up Hazem Omar, who leads the Republican People’s Party, received 4.5 percent of the vote. Next came Farid Zahran, leader of the left-leaning Egyptian Social Democratic Party, and Abdel-Sanad Yamama from the Wafd, a century-old but relatively marginal party. Click here to read… [27]

UN Security Council passes resolution on increased Gaza aid delivery

The United Nations Security Council has passed a resolution to boost humanitarian aid to Gaza, following several delays over the last week as the United States lobbied to weaken the language regarding calls for a ceasefire. The resolution, which calls for steps “to create the conditions for a sustainable cessation of hostilities”, passed on Dec 22 with 13 votes in favour, none against, and the US and Russia abstaining. The vote came amid international calls to bring the months-long conflict to an end, as Israeli forces pummel Gaza with one of the most destructive campaigns in modern history and humanitarian conditions in the besieged strip reach critical levels. More than 90 percent of Gaza’s 2.3 million residents have been displaced, and conditions under Israeli siege and bombardment have been described by UN officials as “hell on earth”. Intense negotiations took place over the last week, with other member states searching for language that would avoid US objections that have doomed previous resolutions on Gaza in the 15-member body, where the US is one of five countries that hold a veto. The original draft called for “an urgent and sustainable cessation of hostilities” and gave the UN increased control over aid deliveries into Gaza. The adopted resolution opts for less equivocal language on a ceasefire and maintains Israel’s control over all aid. Click here to read… [28]

US Approves $1 Billion in New Military Training for Saudi Arabia

The US State Department approved $1 billion in military training for Saudi Arabia, renewing a program that’s deepened ties between the two partners while still sticking to a ban on the sale of some offensive weapons. The deal includes flight and technical training, professional military education and equipment for the Royal Saudi Air Force and other military branches. The sale will “improve Saudi Arabia’s capability to meet current and future threats,” the State Department said in a statement. There was still no indication President Joe Biden was ready to ease restrictions on some weapons that he imposed early in his administration in protest over the killing of Washington Post journalist Jamal Khashoggi and concerns over civilian casualties in Yemen. On Dec 21, the New York Times reported that the US is preparing to relax some of those limits. But US officials have said Saudi Arabia is largely abiding by the terms of a cease-fire. The administration has come to rely on Saudi Arabia even more in the wake of Hamas’s Oct. 7 attack on Israel and Israel’s devastating response. Click here to read… [29]

Israel Signals It Could Agree to Palestinian Authority Governing Gaza After the War

Israeli Prime Minister Benjamin Netanyahu’s national security adviser indicated that Israel could accept a U.S. plan for a revamped Palestinian Authority to govern the Gaza Strip after the war, a sign that the Israeli leader is easing his opposition to the idea. “Israel is aware of the desire of the international community and the countries of the region to integrate the Palestinian Authority the day after Hamas, and we make it clear that the matter will require a fundamental reform of the Palestinian Authority,” Tzachi Hanegbi, who heads Israel’s National Security Council, wrote in an opinion piece published Dec 21 on the Arabic-language news site Elaph. Israel, he added, “is ready for this effort.” Biden administration officials said Hanegbi’s comments in the opinion piece were a welcome development. But an official said the administration still believes the PA isn’t ready yet to go into Gaza anytime soon, as it will take time to revamp the organization both politically and financially. Israel is beginning to grapple with the dilemma that, after its troops withdraw, some entity will need to step into war-shattered Gaza to deliver food, shelter and medicine to the 2.2 million people who live there. Without a civil administration ready to assume responsibility for Gaza after the war, the already dire humanitarian conditions could worsen, creating new security risks. Israel says it doesn’t want a role in administering Gaza after the war. Click here to read… [30]

Congo Holds Election Amid World’s Worst Hunger, Displacement Crisis

Voters in the Democratic Republic of Congo—a vast nation that holds many of the minerals needed to build electric cars, smartphones and other devices central to modern life—cast their ballots Dec 20 in an election plagued by delays, protests and the war in the country’s east. Polling stations in the capital Kinshasa and several other towns opened hours late because voting materials hadn’t been delivered. Congolese officials said they were likely to extend voting in some districts to Dec 21 to make up for the delays. In areas of Ituri and North Kivu, two eastern provinces that have seen some of the worst rebel fighting, police and soldiers fired tear gas to disperse protesters who said they were prevented from casting their ballots because their names weren’t on the voting register. President Felix Tshisekedi is squaring off with 19 opposition candidates, including the owner of one of Africa’s most successful soccer clubs, a Nobel Peace Prize winner and a former Exxon Mobil executive who is widely seen as the actual winner of the last presidential vote in 2018. A poll released Dec 19 by New York University’s Congo Research Group, a local nongovernmental organization and the Congo-based Bureau d’Études, de Recherche et de Consulting International forecast Tshisekedi as the clear winner, with 49.3% of the vote. Click here to read… [31]

Sudan Militia Takes Towns That Were Seen as Havens From War

Over the past week, the RSF, which grew from the Janjaweed militia that terrorized the western Darfur region two decades ago, has taken a series of cities and towns in central Sudan. It has notched some of the biggest victories in its eight-month-old war with the Sudanese military and tested its hold over one of Africa’s most resource-rich and strategically-located nations, overlooking busy Red Sea shipping lanes. The new areas under RSF control had been havens for hundreds of thousands of people who were forced out of Khartoum earlier this year. Now many of them are fleeing again. Aid agencies estimate that over the course of 72 hours this week, some 300,000 people left Sudan’s second-largest city, Wad Medani, and nearby towns, in cars, buses, trucks, donkey carts or on foot. Many, like Ahmed, escaped with little more than the clothes on their backs, separated from relatives and uncertain for how long they could stay in their newest hiding spot. The RSF’s rapid advance into Gezira state, a region that hadn’t been touched by Sudan’s other recent conflicts, came as a shock to many of its residents and raised questions over the military’s ability to defeat the militia to secure full control. A spokesman for the military said Dec 19 that an investigation was under way into the circumstances of the troops’ withdrawal from Wad Medani. Click here to read… [32]

Health

‘Barely a drop’: UN warns water shortages a deadly risk for Gaza children

Limited access to clean water and sanitation amid Israel’s relentless bombardment pose a grave risk to children in Gaza, the United Nations Children’s Fund (UNICEF) has warned. Huge masses of displaced people herded into the southern Gaza Strip by the war are accessing only 1.5 to 2 litres of water per day, well below the recommended requirement for survival, the UN agency stated on Dec 20. The crisis, antagonised by limited aid deliveries and the destruction of infrastructure, puts huge numbers of vulnerable children at risk of disease, it added. Pushed by Israel’s continued onslaught across the enclave, hundreds of thousands of people, around half of them estimated to be children, have been pushed into the city of Rafah since early December, and are in desperate need of food, water, shelter, medicines and protection, UNICEF said. As demand continues to rise, water and sanitation systems in the city are in an extremely critical state. UNICEF says that 3 litres are required daily for survival. The amount rises to 15 litres if water required for washing and cooking is also counted. “Access to sufficient amounts of clean water is a matter of life and death, and children in Gaza have barely a drop to drink,” said UNICEF Executive Director Catherine Russell. Click here to read… [33]

Malaysia and Singapore put guard up as COVID cases surge

Southeast Asian governments are bracing as COVID-19 infections are already surging and more foreign tourists pour into the region ahead of the year-end holidays. Malaysia has reactivated the Heightened Alert System -- an early intervention protocol based on the infection and death levels as well as the hospitalization rate -- to better monitor and appropriately respond to infections. Singapore, Thailand and Indonesia have issued advisories asking people to mask up and get vaccinated. The number of cases has shot up as much as 75% in these countries since the start of this month, pushing case numbers into the tens of thousands. Experts say there is no need for lockdowns or border closures this time, noting governments are better prepared, ensuring that economies and businesses will remain open and uninterrupted. At the same time, residents and travelers are being encouraged to do their part to stay safe as they go from gathering to gathering and place to place. New infections in Malaysia shot up by 62.2%, to 20,696, during the week of Dec. 10 to 16. Of the cases, 97% were mild, though 96 patients were on ventilators and 28 deaths occurred. The highly infectious omicron variant was predominant. Click here to read… [34]