Daily Memo: Contests for Influence in Iraq and the South China Sea

Iran’s diminished influence. Iranian influence in Iraq suffered a major blow after Iraqi Prime Minister Mustafa al-Kadhimi directed a raid last week on a Kataib Hezbollah post, leading to the arrest of over a dozen fighters and the confiscation of weapons systems. Several Iran-backed militias have accused the U.S. and Iraq of fomenting division, but the Iranian government itself has been careful not to publicly incite further tensions with Iraq. Iran’s Foreign Ministry spokesman, for example, said that the raid was an internal Iraqi affair and that Iran has no comment. At the same time, Tehran issued arrest warrants for U.S. President Donald Trump and 30 other U.S. officials for their involvement in the Jan. 3 killing of Iranian Gen. Qassem Soleimani in Iraq. It also asked Interpol to honor the warrants. The Iranian government knows nothing will come of this, but it intends for the request to serve as a warning against U.S. interference in Iraq. The COVID-19 crisis and U.S. sanctions continue to hamper Iran’s ability to finance its militias and political proxies in Iraq. After billions of dollars in Iranian central bank assets were frozen under U.S. sanctions and the Iranian rial fell to its lowest level […]

Daily Memo: Russo-Indian Defense Deals, Iraq Cracks Down on Iranian Influence

Russia and India pick up the pace. The Russian government will accelerate implementation of a defense contract with India that includes delivery of five S-400 air defense systems, according to the Russian newspaper Kommersant. New Delhi was originally set to receive the first S-400 in 2021, but after a three-day visit to Moscow by India’s defense minister, India now expects initial delivery by the end of this year. Russia and India are also intensifying negotiations over a contract for the supply of 21 MiG-29 fighters and 12 Su-30MKI fighters – an arrangement estimated to be worth $650 million. New Delhi is concerned with preserving the long-term balance of power on two borders simultaneously – with China and with Pakistan, both of which are accelerating the modernization of their air forces – and thus wants to pick up the pace of the Russian defense deals. Iraq gets tough on Iranian influence. Iraqi security forces carried out an overnight raid in southern Baghdad of the headquarters of an influential Iranian-backed militia, Kataib Hezbollah. They confiscated rocket launchers and detained over a dozen fighters for their alleged involvement in missile attacks on U.S. and coalition bases over the past year. Though the Iraqi government said […]

Daily Memo: IMF Warnings, Japanese Defenses

Lebanon’s economic woes. The International Monetary Fund has warned that Lebanon’s central bank has accumulated $49 billion in losses due to defaults on bond holdings and the falling value of the country’s currency. The country appears headed toward hyperinflation; in some areas of Lebanon, the Lebanese currency is now trading at 7,000 lira to the dollar. (Officially, the lira is pegged at 1,507.5 to the dollar and has lost over 75 percent of its value since October.) Some people are trying to use this as an opportunity to turn a profit by selling newly purchased dollars at the higher exchange rate at currency shops. On Wednesday, the Lebanese parliament began reviewing steps to declare a financial state of emergency to protect the lira. Parliamentary speaker Nabih Berri warned that Lebanon wouldn’t receive “one penny” in aid from outside actors if it didn’t implement serious political and economic reforms. U.S. Secretary of State Mike Pompeo echoed that sentiment on Thursday, saying the U.S. was prepared to offer its support on the condition that Lebanon carries out national reforms. The U.S. also indicated that the IMF would provide assistance only if Lebanon enacted internal reforms. Tokyo reconsiders its defense systems. Japan is […]

Daily Memo: North Korea Backs Down, Putin Promises Changes

Kim backs down. North Korean leader Kim Jong Un suspended plans for “military action” against South Korea, per state media on Wednesday. North Korea also reportedly began taking down loudspeakers blasting propaganda toward the South – something that doesn’t particularly bother Seoul but that drives Pyongyang batty when South Korea cranks up its own loudspeakers. This caps several weeks of hostility from the North toward Seoul, ostensibly over the launching of balloons carrying food and anti-Kim propaganda across the Demilitarized Zone by activists in the South. The North’s recent moves have been peculiar, to say the least, but point mostly toward internal stresses. The most likely explanation was that Kim was trying to help his sister, Kim Yo Jong, consolidate some power, as his alleged health problems over the past few months exposed how unprepared the regime is for an untimely demise by the leader. When the regime gets preoccupied with power struggles in the capital, it often makes a big show of external hostility in order to both impress the masses at home and warn outside powers against any attempts at political meddling. Meanwhile, North Korea is widely believed to be under immense economic pressure. (China is reportedly quietly […]

Daily Memo: India and China Pull Back From the Brink

Cooler heads in the Himalayas. India and China on Tuesday agreed on a set of “modalities for disengagement from all friction areas in eastern Ladakh” in the Himalayas, per a Chinese Foreign Ministry statement and unnamed Indian government sources. Few details of the pullback have been released. As we’ve discussed, the unforgiving geography of the Himalayas strictly limits on the ability of either side to escalate matters along the Line of Actual Control itself – making it relatively easy for cooler heads to prevail. But that doesn’t mean the clashes can’t lead to indirect escalation elsewhere. India, for example, is pushing through a bevy of new restrictions on doing business with Chinese firms amid widespread public calls for a boycott targeting Chinese goods. New Delhi is reportedly reconsidering its reluctance to ban Chinese telecom giants Huawei and ZTE from its 5G buildout. On the military front, India has reportedly asked Russia – for years, India’s foremost arms supplier – to expedite deliveries of new fighter jets and S-400 missile defense systems. Either way, Chinese pressure in the Himalayas isn’t about to go away. On a related note, Nepal’s government is reportedly concerned that China’s rerouting of rivers in Tibet will […]

Daily Memo: Protests in Belarus, Armed Forces Reforms in China

Unrest in Belarus. Protests have erupted again in Belarus against the detention of activists and presidential hopefuls set to challenge President Alexander Lukashenko in elections that will take place on Aug. 9. About 270 participants – at least 80 in Minsk and about 10 each in Gomel, Vitebsk and Bobruisk – were arrested for violating rules against holding mass events and disobeying police officers. The EU has voiced its support for the protesters, saying that Belarusian authorities must ensure equal conditions for all those who wish to participate in the presidential elections. Viktor Babariko, the former head of Belgazprombank, was detained last week over allegations of tax evasion and money laundering, and protest leader and blogger Sergei Tikhanovsky had previously also been jailed. After verifying the signatures of each presidential nominee, the Central Election Commission of Belarus allowed seven candidates, including Babariko, to enter the race. But it’s likely that the protests will continue, and it’s unlikely that Lukashenko will allow tough measures that would clamp down on the protesters. He still controls the power structures, and he needs to ensure that the election is contested to avoid accusations of misconduct not only from voters but also from the West, […]

Daily Memo: China Tightens Its Belt and Road

Beijing tightens its Belt and Road. China on Friday admitted that nearly a fifth of its BRI projects have been “seriously affected” by the economic fallout from the coronavirus pandemic. According to a Chinese Foreign Ministry survey, another 30-40 percent of BRI projects have been “somewhat affected.” We have no idea what either of those descriptions means in reality. But it stands to reason that, between China’s need to focus its fiscal resources on domestic rescues and the financial fix that governments across the world are suddenly in, projects that were already commercially dubious are now prime candidates for the chopping block. Even before the pandemic, Beijing was forcing state-backed banks and firms involved in BRI projects to apply greater scrutiny to their investments. Partner countries were doing the same. On Friday, Pakistan announced that it was slashing its contribution to the China-Pakistan Economic Corridor – one of Beijing’s flagship BRI initiatives – by as much as a third. And a Pakistani Senate committee is demanding the release of details about an agreement between Beijing and Islamabad on the strategically lucrative Gwadar port project, which is at the center of speculation about Chinese naval ambitions in the Indian Ocean. It’s worth […]

Daily Memo: Russia’s Regional Budgets, US-UK Trade

Russian government revenue falls. According to a study by the HSE Center of Development Institute, revenues for Russia’s regions fell on average by 30 percent in April relative to April 2019 due to declining oil prices and the coronavirus crisis. The largest decline was in the Yamalo-Nenets Autonomous District, Astrakhan region, the Komi Republic, Tuva Republic and the Krasnodar Territory, all of which saw their revenues fall by at least 60 percent. Revenues from income taxes fell by 29 percent, from personal income taxes by almost 20 percent and from property taxes by 44 percent. This was the result of slowing business activity, a fall in salaries and rising unemployment. (In the first two weeks of June, the number of officially registered unemployed people increased by 16 percent, totaling 2.42 million people.) At the same time, however, spending in the regions increased significantly, especially on medicine, expenditures on which nearly doubled. It’s expected that after quarantine restrictions are lifted, the economy will gradually improve, but the lower income levels may continue to cause problems for the federal government. The regions will find it hard to finance not only previously planned projects but also the sectors that were hurt significantly by […]

Daily Memo: Clarity on the Himalayan Skirmish, More Confusion in Korea

Sticks, stones and 15,000-foot cliffs. As it turns out, the first casualties since 1975 in the India-China Himalayan standoff came not from a firefight, as assumed. (This is important, as it would have meant one or both sides had broken a mutual protocol that bars troops in the area from carrying firearms, potentially presaging a dangerous break from the historical pattern.) Rather, it appears the mother of all brawls broke out in the disputed Galwan Valley when, at least per Indian media, Chinese troops “trapped and encircled” an Indian patrol of some 120 troops in an area China had previously agreed to vacate. The melee, which lasted some six hours, involved stones, iron rods and “nail-studded clubs.” Some of the reported 20 Indian troops who died reportedly fell to their deaths off a 15,000-foot cliff. Others died from their injuries and/or exposure as nightfall brought with it subzero temperatures. Indian media and U.S. intelligence are claiming that there were as many as 43 Chinese casualties as well, and Beijing has hinted that this was indeed the case, without confirming it. (In past conflicts, China did not provide official casualty counts for years or even decades afterward.) The schoolyard nature of […]

Daily Memo: Making Sense of India, China and North Korea

Actual deaths on the Line of Actual Control. Violent clashes broke out Monday in the Galwan Valley, a disputed area in the Himalayas on the border of India and China. Three Indian soldiers were killed when, according to China’s Foreign Ministry, they crossed into Chinese territory. India, of course, denied the claim. Details about the incident are unclear. What we do know is that China and India have been engaged in a border standoff since the end of May. Since then, there have been multiple skirmishes followed by attempts to calm down. Remarkably, these are the first fatalities in the area (along what’s known as the Line of Actual Control) in more than 40 years — a period marked by repeated low-level clashes between the Indian and Chinese militaries. This speaks to the inherent difficulty of conducting major combat operations in one of the world’s most extreme geographic environments and the success Beijing and New Delhi have had in keeping small-scale incidents between them from escalating. (Troops stationed along the Line of Actual Control typically do not carry firearms, per protocols agreed upon by both sides.) But even before Monday’s incident, there were signs that things were starting to change. […]

Daily Memo: Beijing’s New Coronavirus Outbreak

Beijing catches a big wave. The Chinese capital is scrambling to contain a substantial new COVID-19 outbreak involving at least 79 new cases, most of which could be traced to the city’s largest wholesale market. This is notable because Beijing had previously gone 56 consecutive days without a new domestically transmitted case, underscoring just how difficult it is to stamp out the virus completely. As we discussed regarding South Korea, though, think of it like putting out a forest fire: Periodic flare-ups will be inevitable for some time to come. What matters most is the ability of a government to respond quickly and effectively when they inevitably occur. In China, true to form, authorities are responding the best way they know how – with brute force – locking down a dozen neighborhoods, canceling schools and closing indoor tourism sites. They also appear to be implicitly trying to shift blame for the outbreak by linking it to imported salmon. There is scant evidence that the virus moves around the world on cargo, so this is dubious and speaks to the extreme political sensitivity in China about the Communist Party’s handling of the epidemic and the role of Chinese markets in its […]

Daily Memo: Speeding Up Withdrawals and Vaccines

Countering Iranian influence in Iraq. After discussions on bilateral relations on a host of issues between the U.S. and Iraq, Washington officially committed to continue to withdraw troops from the country. After 17 years of war, there are plenty of reasons to believe Washington sincerely wants to reduce its footprint there, but Iran’s presence in Iraq complicates the issue. Iraq consumes a lot of Iranian energy exports, and Tehran maintains a lot of influence among Iraqi political leaders, cultivated in no small part through its many Shiite militias. The U.S. has allowed Iraq to continue electricity imports from Iran by extending a waiver on sanctions, but the two countries plan to explore alternative energy options. Baghdad has also committed to placing Iranian proxies, including those of the Popular Mobilization Forces, under further governmental control. Other issues are working in Washington’s favor too. Sanctions and the coronavirus pandemic have kept Tehran from doling out the support to proxy groups it normally extends, leading to fresh reports of discontent among the many militias. Expediting a vaccine. In conjunction with the U.S. National Institutes of Health, phase three clinical trials — the final major hurdle to regulatory approval — for three coronavirus vaccines […]