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Daily Memo: On Cease-Fires, Sanctions and Sensitive Negotiations

All the news worth knowing today.

GPF Staff |August 9, 2018

Israel and Hamas came to blows on Wednesday. Hamas fired nearly 200 rockets and mortar shells at Israel, and Israel responded by striking 150 Hamas targets in Gaza. So far, the signals coming out of Israel are hardly encouraging. A senior official for the Israel Defense Forces said that Israel and Hamas were “rapidly nearing a confrontation.” An IDF spokesman said additional forces had been deployed to the area and preparations to evacuate southern Israel were in place. Prime Minister Benjamin Netanyahu will convene his security Cabinet to discuss next steps. The main thing to watch is whether Israel calls up reserves. Right now, war doesn’t appear to be imminent, but the past 24 hours have shown that things can change at a moment’s notice. So much for the cease-fire Egypt was believed to be brokering.

Iraq is (sort of) pushing back against U.S. sanctions on Iran. The government in Baghdad said it would respect the sanctions, but multiple Shiite militia groups, wary of having their country fall back into the U.S. camp, have said they will not. A Shiite parliamentary bloc went one step further, calling on the Iraqi government to actively support Iran in these trying times. This all makes a certain amount of sense. Iraqi consumers depend heavily on Iranian exports, so fully adhering to the sanctions would undermine the Iraqi economy – an economy that is still trying to manage unrest near oil facilities in Basra.

Iraq isn’t alone in its opposition. Other countries have begun to request waivers from the U.S. government to circumvent sanctions too. Afghanistan wants continued access to Iran’s Chabahar port. India is in talks for a waiver or quota scheme that allows it to still import from Iran. Even normally docile Norway is considering the possibility of taking unilateral steps to protect its businesses from the sanctions. Washington has already granted waivers to Azerbaijan, Turkey and Greece – all of which are Southern Gas Corridor countries.

The United States will introduce a new round of sanctions against Russia for its involvement in the death of a former Russian agent in Britain. The sanctions would cover goods related to Russia’s national security and are expected to focus on sovereign debt, energy, Russian state financial institutions and Nord Stream 2. It’s unclear how the sanctions will impact the Russian economy. Certain businesses will likely be exempted, and in any case, Moscow has recently taken steps to prepare for this very contingency. (Moody’s believes the economy is fairly sufficiently insulated.) The political impact will be more acute, considering the sanctions come as Russia and the U.S. were on the brink of improving bilateral ties.

North Korean nuclear talks remain gridlocked. Neither the U.S. nor North Korea has taken concrete steps to advance negotiations. If leaked U.S. intelligence from a few weeks ago is to be believed, Pyongyang continues to develop its weapons program. The U.S. has called on regional partners to impose stronger sanctions. Washington has said it is losing its patience but has not said what it would do if North Korea continues to stall. Unremarkable as these updates may sound, this is arguably the most sensitive phase in the negotiations, since each side is trying to spur the other to action without compromising its own national security interests.

Honorable Mentions

  • Tensions with Canada will not affect Aramco’s Canadian clients, according to the Saudi energy minister.
  • Russia has agreed to train Pakistani troops as part of ongoing efforts to improve bilateral defense cooperation.
  • Iran’s labor minister has been impeached.
  • Australia and India have agreed to improve bilateral trade ties, which will include signing a free trade agreement.
  • In a continuation of its anti-corruption campaign, the Vietnamese government has fired the deputy police minister. So far, he is the highest-ranking figure to fall.
  • Pakistan will add up to 60,000 troops over the next two years to patrol its border with Afghanistan.