Checkup on Europe’s economy. The manufacturing sector continues to drag down eurozone economic growth. IHS Markit’s flash Purchasing Managers’ Index shows that the services sector remains strong, but the manufacturing PMI fell to 46.4 in July from 47.6 the previous month, the worst reading since December 2012. (Any number below 50 signifies contraction.) The data was particularly bad for Germany, whose economy, according to IHS Markit’s chief business economist, is at risk of contraction in the third quarter. As if Berlin needed more bad news, Bloomberg reported on Tuesday that low water levels on the Rhine River may impede shipping for the second straight year. Water levels at one chokepoint near Frankfurt are as low as 59 inches (150 centimeters), restricting movement of the heaviest barges. Overall, the eurozone economy is expected to grow by just 0.1 percent in the third quarter, IHS Markit said. The European Central Bank’s Governing Council meets on Thursday and could announce a new rate cut or a resumption of bond purchases.
Patrolling the strait. France, Italy and Denmark have tentatively backed a U.K. proposal to jointly monitor and protect shipping through the Strait of Hormuz. Spain, Germany, the Netherlands and Poland are considering the idea. France and the U.K., which both have naval bases in the area, reportedly could share command of the mission. This comes as the U.K. Ministry of Defense confirmed that six of its 13 frigates and three of its six destroyers are currently out of commission. It also comes just a few weeks after Europe largely shunned a similar U.S. proposal, which French Foreign Minister Jean-Yves Le Drian described as an effort to apply “maximum pressure” on Iran – the opposite of the European proposal, he said.
U.S. Coast Guard in the Western Pacific. The U.S. Coast Guard has announced that it will increase deployments in the Western Pacific, with an emphasis on the second island chain and joint operations with regional allies. The Coast Guard will deploy two ships, a 225-foot Juniper-class buoy tender and a fast response cutter, to work with Pacific island nations. The buoy tender’s presence will be a proof-of-concept operation to determine if it can be used as a mothership to smaller patrol craft. If the deployment proves successful, it could be the first step toward a larger U.S. Coast Guard presence in the Pacific aimed at keeping the heat on Chinese naval operations by providing additional support to regional U.S. allies, a possibility that we discussed earlier this year.
Middle Eastern competition in the Horn of Africa. A bombing on May 10 in Bosaso, Somalia, may have been supported or encouraged by Qatar, according to a report by The New York Times, which claims to have obtained a recording of a call between the Qatari ambassador to Somalia and a businessman with ties to the Qatari emir. On the call, the businessman said the attack was meant to drive out Emiratis in the area so that locals would be dissuaded from renewing contracts with the United Arab Emirates and instead turn to Qatar. Relations between Qatar and the UAE have been tense since the Saudi-led blockade against Qatar two years ago. Both Qatar and Somalia have denied the report, claiming that they had no involvement in the attack.
- Uzbekistan has officially started negotiations to join the World Trade Organization. Turkmenistan, meanwhile, will launch a bilateral economic commission with Iran to encourage trade ties between the two countries.
- On July 17 North Korea seized a Russian fishing vessel with 17 sailors aboard for “violating the rules of entry and stay in the territory of [North Korea].”
- The Swedish operator of the British-flagged ship that was seized by Iran last week said on Wednesday that the crew members are “in good health” and cooperating with the Iranians on board, after speaking to the crew by phone on Tuesday.
- Deutsche Bank’s quarterly numbers came in even worse than expected: The bank saw losses of 3.15 billion euros ($3.5 billion), compared to expectations of a 2.8 billion-euro loss. Three anonymous Deutsche Bank insiders told Reuters that it will take the bank years to shed 288 billion euros of unwanted assets, with a potential price tag of 500 million euros annually in lost income.
- A power-sharing agreement has been reached in Sudan between military leaders and opposition parties.
- Iran’s 12-month inflation rate, as of July 23, exceeded 40 percent. The rial was trading at 120,000 to the dollar on the black market.
- After meeting with U.S. President Donald Trump, Pakistani Prime Minister Imran Khan said he will meet with the Taliban to help move forward the peace process in Afghanistan.
- Israel carried out another missile strike in southern Syria, targeting locations in Daraa and Kuneitra, including a weapons warehouse, according to Syrian media. Israeli media reported that a Hezbollah operative who was trying to establish a permanent force in the Syrian Golan Heights was killed in the town of Sasa.
- The EU will provide Ankara 1.4 billion euros to help Turkey manage the 4 million Syrian refugees living there.
- U.S. Central Command said a U.S. warship may have brought down a second Iranian drone last week. A spokesman for CENTCOM said it happened at the same time that another drone was confirmed to have been downed.
- China has warned that the Chinese army could be deployed to Hong Kong to help quell the ongoing protests there. China’s defense minister also warned that, if Taiwan were to claim independence, Beijing would be ready to go to war over the issue.