The EU, the U.S. and auto imports. The European Union is bracing for the Trump administration’s response to a U.S. Commerce Department report on auto imports. The confidential report includes the findings of an investigation into whether auto imports pose a threat to U.S. national security. President Donald Trump received the report over the weekend, and he now has 90 days to determine whether to place up to 25 percent in new tariffs on cars manufactured in Europe. The Federation of German Industry has already called for the report to be made public to reduce business uncertainty. The head of the European Commission said that Trump told him there will be no tariffs “for the time being.” However, he also said that if Trump changes his mind, the EU is ready to react swiftly, and would not feel obligated to buy more U.S. soy and liquefied natural gas.
Sanctions take their toll on Russia. The Ministry of Economic Development calculated that, through the end of 2018, the total damage of sanctions to the Russian market is at $6.3 billion ($2.4 billion from the effects of EU sanctions and $1.1 billion from U.S. sanctions). The metallurgy industry suffered the most, losing $4 billion. Experts at Russia’s Higher School of Economics noted that manufacturing stagnated last year, with growth driven by extractive industries. This dependence on oil brings into question growth sustainability for 2019 at a time when real income is falling, the energy market is unstable, and regional debt is rising.
Economic development in China. The Communist Party of China and the State Council released development plans for the Guangdong-Hong Kong-Macao Greater Bay Area. These three regions have an economy worth $1.48 trillion, about the same size as Spain’s. The plan is part of China’s broader strategy for economic reform, including components focused on developing an innovation and technology hub, expediting infrastructure connectivity and creating a globally competitive modern industrial system – all of which this region is more conducive for than other regions in China. As is the case with most of China’s ambitious development plans, this one is easier said than done. The three distinct regions have different social and legal systems, customs unions and currencies, underscoring how unwieldy China’s governing approach of “one country, two systems” can be.
The Islamic State in Libya. It’s been eight years since the fall of Moammar Gadhafi, but Libya is still torn between two competing governments trying to gain control of the country. It is in this context, a Russian diplomat warns, that the Islamic State is becoming more active in Libya, especially in Tripoli, and is strengthening its ties to al-Qaida. Russia isn’t the only one that’s worried; the U.S. carried out airstrikes on al-Qaida targets in Libya last week, just days after a delegation from Libya’s U.N.-backed government visited Washington. If the Islamic State is growing stronger and expanding in Libya, it could draw in outside actors including France, the U.S., Russia and Egypt.
- The German, French and British intelligence chiefs are exploring ways to cooperate more closely on cyberdefense and on countering other threats to Europe. They noted cooperation will continue post-Brexit.
- Pakistan has emerged from its balance of payments crisis, according to the state bank governor. The bank is still working on a deal with the International Monetary Fund that will help Pakistan minimize its current account deficit.
- Iran’s parliament approved a bill allowing the government to accept a $5 billion loan from Russia.
- The China Gezhouba Group Company signed a contract to complete the construction of the generating station and spillways for the Grand Ethiopian Renaissance Dam.
- Russia published reports of U.S. reconnaissance aircraft flying over the Syrian coast, near its Hmeimim and Tartus bases, and over the coast of the Crimean Peninsula.
- Saudi Arabia has offered to help Pakistan de-escalate tensions with India. Israel has pledged unconditional support to India’s self-defense, particularly against terrorism.