RANE: Insight Series 5/6/2022
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| GEOPOLITICAL DIGEST | |||
| MAY 06, 2022 | |||
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The Week Ahead:Election Day in the Philippines. The Southeast Asian island country will select a new president, vice president, 12 senators, 300 lower house legislators and about 18,000 officials on 9 May. The leading presidential candidate is Ferdinand Marcos Jr., the son of the longtime former Philippine dictator, followed by the current vice president, Leni Robredo. Marcos has formed a coalition with Sarah Duterte, the daughter of current President Rodrigo Duterte, who is seeking the vice presidency. If Marcos wins, the Philippines will likely continue leaning toward China in hopes of securing infrastructure investments. But if Robredo wins, the country would probably tilt back toward the United States, seeking renewed security guarantees from Washington. Hong Kong Elections. On 8 May, Hong Kong will hold its chief executive election, with Beijing loyalist John Lee expected to succeed current Chief Executive Carrie Lam. Only 1,461 "patriots" approved by Beijing will be allowed to vote, and since Lee is the only candidate, his victory is all but assured. The background of Lee, who oversaw the crackdown on pro-democracy protests, indicates that the new Hong Kong leadership will likely focus more heavily on security as the city continues being reincorporated into China, suggesting new crackdowns on speech and press are likely in the near term. Victory Day in Russia. 9 May will see Russians observe Victory Day, which commemorates the victory over Nazi Germany. This year's parade on Red Square is likely to be the most emotionally charged in the history of post-Soviet Russia due to the war in Ukraine, and comes amid reports that Western intelligence officials believe the Kremlin is considering using the occasion to officially declare war on Ukraine and announce a general mobilization. Russian President Vladimir Putin is, however, more likely to declare victory or partial victory in what Russia calls its "special military operation" and postpone a decision on mobilization. Politicking in Lebanon. Candidates will continue campaigning throughout the week leading up to Lebanon's 15 May parliamentary election, as will sporadic anti-government demonstrations. This will be the first vote since the October 2019 protest movement began and since the August 2020 Beirut Port explosion, but frustration with government paralysis is likely to manifest in voter apathy. Whether independent candidates unaffiliated with the traditional sectarian parties win enough votes to earn seats in the next parliament remains to be seen. Please read on for our coverage of the week that was... |
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| • Key Developments - Analysis • Other Stories We're Tracking - Curated Content | |||
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What Happened: European Commission President Ursula Von der Leyen on 4 May unveiled proposals for a sixth package of sanctions against Russia, Bloomberg reported. The sanctions include phasing out imports of Russian crude oil within six months and refined oil products by the end of the year. According to media reports, Brussels also wants to ban European companies from providing services (ranging from shipping to insurance) connected to the transportation of Russian oil, which would make it harder for Russia to ship oil to other parts of the world because of Europe's dominant role in tanker insurance. The European Commission is also proposing cutting off Sberbank and other Russian banks from the SWIFT international payment system. Why It Matters: To pass, the commission's proposals will require unanimous approval from all 27 EU member states. To secure their support for the plan, Hungary and Slovakia -- which are heavily reliant on Russian oil and have limited options to diversify their suppliers -- would have until the end of 2023 to enforce the sanctions, according to EU diplomats. The governments of Hungary, Slovakia, the Czech Republic and Bulgaria have, however, expressed concerns about the negative impact of the oil ban on their economies, meaning Brussels may have to give them additional exemptions. The sanctions could negatively impact the EU economy, especially if they result in higher oil prices. The European Union currently faces slow economic growth and high inflation, which insufficient or more expensive energy supplies could worsen; should Russia cuts supplies of natural gas in retaliation for the sanctions, its economic pain would deepen. | ||||||||
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What Happened: The Securities and Exchange Commission on 5 May added more than 80 Chinese companies to a list of companies at risk of delisting should they fail to comply with U.S. auditing standards, Reuters reported. The SEC based its decision on the Holding Foreign Companies Accountable Act (HFCAA), a 2020 law that provides for the removal of foreign companies if they fail to comply with US auditing standards for three consecutive years. U.S. regulators have demanded access to specific records and documents stored in China, but Chinese authorities have refused on national security grounds. The two sides are trying to negotiate a deal. Why It Matters: The SEC warnings to Chinese companies mean that the United States does not share China's optimism regarding the outcome of the talks. This means the SEC will continue holding Chinese firms to the federal auditing standards, putting more Chinese companies at risk of delisting. Even if Chinese and American authorities reach an agreement, the situation highlights the difficulties American regulators have when dealing with Chinese firms listed on US exchanges, which could negatively impact investor confidence in Chinese firms. | ||||||||
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What Happened: Beijing on 6 May ordered all government agencies and state-backed corporations to remove all foreign PCs and software within two years and replace them with domestic alternatives, Bloomberg reported. The decision would affect at least 50 million government computers alone. It will also likely give domestic manufacturer Lenovo increased hardware market share, while domestic software companies like Kingsoft and Standard Software probably can supplant Microsoft and Adobe in the Chinese market. The ban probably will not apply to specific high-end parts, such as microprocessors, so long as there is no viable domestic alternative. Why It Matters: The move represents the next step in a decades-long process by the Communist Party of China to lessen its exposure to foreign companies and entities for security reasons. It will heavily restrict foreign firms' access to Chinese government or government-adjacent contracts, cutting off a significant revenue source. The ban easily could be expanded to new industries in the future, keeping risks to foreign tech companies in China high going forward. | ||||||||
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| This episode of RANE's Essential Geopolitics podcast is about RANE's exclusive two-part series on Russia's spy network in Europe written by Rane Director of Analysis Sam Lichtenstein for RANE Worldview. In his column, he wrote that "amid the intense global media coverage of the military conflict in Ukraine, another battle is being waged largely in the shadows: Russia's spy network across Europe is being decimated. But why — and how? Please click on the RANE Worldview link below to access the podcast. | ||||||||
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| Throttled by Beijing’s zero-tolerance approach to Covid-19, China’s economy is facing a spell of slower growth. The fallout from the war in Ukraine has pushed up costs for Chinese businesses and contributed to fading overseas demand for their exports.Regulatory crackdowns have hit high-growth sectors such as technology and education. Any sustained slowdown in China will be felt globally, depriving the world economy of one of its most dependable engines. Commodity-exporting countries like Brazil that count on Chinese demand for products such as iron ore and other metals could see demand wane. | ||||||||
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| Sakhalin-2, an oil and gas project in Russia's Far East, was once an expression of faith in Russia's global future. Today, however, the project has come to symbolize the end of that optimistic era. Vladimir Putin's invasion of Ukraine has spurred sanctions on Russian energy across the globe. For resource-poor Japan, which depends on the project for much-needed gas, the dilemma is particularly acute. | ||||||||
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| Finance minister Lawrence Wong, 49, was confirmed last month as the successor to Lee Hsien Loong, son of Lee Kuan Yew and the current prime minister. But Wong, who would be only the fourth prime minister in the quasi-authoritarian state’s 56-year history, faces a more difficult task than any of his predecessors in maintaining friendly relations with China and the west. Today, Singapore trades more with China than any other country and the US is its biggest foreign investor. Wong, who as with every prime minister to precede him is ethnically Chinese and western educated. | ||||||||
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| Clashes on Afghanistan’s border with both Pakistan and Iran signify an end to the relative wary regional calm that has prevailed since the Taliban returned to power in Kabul. Pakistan perceives that the Taliban de facto authorities of Afghanistan are sympathetic to Pakistani militants that threaten Pakistan’s stability. Any tensions with Afghanistan reduce Pakistan’s ability to use the Taliban and their influence as leverage against India. Iran’s longstanding differences with the Afghan Taliban have begun to re-emerge in the form of border clashes and mutual accusations. | ||||||||
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| While the Kremlin is busy in the west, developments to the south promise further threats to its aggressive policy in the borderlands. The South Caucasus is witnessing huge developments which could potentially decrease tensions between Armenia on the one hand and Turkey and Azerbaijan on the other. In the longer-term Armenia’s northward dependence on Russia would gradually be diluted. While Russia's back is turned, other borderland countries are thinking about how to ease Russia's grip over their futures. | ||||||||
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