European champions. The European Union blocked a deal between Germany’s Siemens and France’s Alstom, saying the merger would have violated EU antitrust policy. The European Commission also vetoed a bid by German copper company Wieland-Werke to buy a business unit from Aurubis on similar grounds. Even before the veto was official, France’s finance minister told France 2 television that “the current EU rules are obsolete.” France wants to work with Germany to revise EU competition laws, but Germany has already expressed doubts on some of France’s initial proposals, even if it agrees more broadly that the rules need an overhaul. This is not your garden-variety bureaucratic squabble about EU regulations; it cuts to the heart of the relationships between Germany and France and between the EU and its member states – especially those states that don’t have the luxury of rewriting rules when they run afoul of Brussels.
Australia strikes back at China. A few weeks ago, dual Chinese-Australian national Yang Hengjun was arrested in China for allegedly “endangering state security.” The former Chinese diplomat turned novelist and critic of the Chinese government is still being held in Beijing and has been denied access to a lawyer. Well, two can play at that game. Yesterday, Australia decided to strip Chinese property developer Huang Xiangmo of his permanent residency. Huang had lived in Australia for years and attracted scrutiny over his political donations in Australia and ties to the Communist Party of China. According to the Sydney Morning Herald, Huang was not just barred from returning to Australia (he was abroad when the decision came down), but he has also been declared “unfit to hold an Australian passport.” While we can’t be sure the Australian move is a direct response to Yang’s detainment, the two incidents are evidence of the suspicion and hostility on both sides, putting China in yet another diplomatic spat with a Five Eyes country.
Europe’s economic outlook. Every day brings new reason to be pessimistic about European economies. In December, German factory orders fell 1.6 percent from the previous month; most projections had predicted a small rise. Meanwhile, the European Commission is reportedly set to cut its forecast for Italian gross domestic product growth in 2019 from 1.2 percent to 0.2 percent. Aside from being yet another ominous sign of European economic malaise, this may set off a new wave of clashes between the EU and Italy over Italy’s budget, which is now on track to be way off previously agreed targets.
Venezuela update. The United States has sent humanitarian aid to Colombia’s border with Venezuela. The U.S. has no one inside Venezuela to deliver the aid to, but Washington is trying to increase pressure on the Venezuelan military to pull its support for President Nicolas Maduro. Yesterday the Lima Group, a bloc of Latin American nations plus Canada that has largely supported Maduro’s removal, welcomed Venezuela’s opposition leader, Juan Guaido, to the group. According to Venezuela’s central bank, money supply rose 31 percent in the week ending Jan. 25, the fastest expansion since 1997. On Tuesday, Venezuela’s National Assembly passed a law to govern the transition if and when the Maduro government falls. While the law is mostly symbolic – Maduro has been practically ignoring the National Assembly for over a year – at this late stage, symbols are important. Nonetheless, Maduro remains defiant, and the military remains in his corner.
- Germany reassured NATO yesterday that it would increase military spending to 1.5 percent of GDP by 2024 despite its declining tax revenue.
- Japan canceled a port call to South Korea by several Maritime Self-Defense Force ships, including a helicopter carrier, because of strained ties between the two countries.
- Mexico will initiate a new security initiative in 17 regions to try to stem the violence there.
- NATO signed an accession agreement with Macedonia.
- Iran’s supreme leader, Ayatollah Ali Khamenei, has called for “structural reforms” to be implemented in the next four months.