Checking in on China. Yesterday, the People’s Bank of China announced the fourth reduction in the required reserve ratio for banks this year, which translates to a roughly $100 billion liquidity injection for the economy. China’s finance minister was quoted in the People’s Daily as saying that China’s “active fiscal policy will become more active.” The Chinese yuan, which has declined about 9 percent on the dollar in the past six months, continues to weaken, falling to nearly 7 yuan to the dollar before recovering slightly. Official data also showed a $20 billion drop in foreign exchange reserves last month. Meanwhile, China’s foreign minister met with the U.S. secretary of state in Beijing today to try to find “the right path of win-win cooperation,” though there is little the two can talk about that will ease bilateral relations right now. China isn’t exclusively on the defensive, though. Data from the U.S. Census Bureau released last week showed that China halted U.S. oil imports in August. (In July, China imported almost 12 million barrels of U.S. crude.). The theme here is clear: China is using monetary and fiscal policy tools to mitigate the damage of U.S. tariffs and sanctions, even as it remains committed to major economic reform.
On the disappearance of a Saudi journalist. Jamal Khashoggi was a columnist of the Saudi daily Al-Watan and a critic of the Saudi government. After Crown Prince Mohammad bin Salman decided he was no longer allowed to write or tweet, Khashoggi left the country. He was also a columnist for the Washington Post, where he continued to speak out against the Saudi monarchy. Last week, Khashoggi went to the Saudi consulate in Istanbul to gather the documents he needed to marry his Turkish fiancee. He hasn’t been seen since. Turkey has accused Saudi Arabia of murdering Khashoggi and claims to have video evidence to support the allegation. (It has yet to produce the video.) The government in Riyadh has denied any role in Khashoggi’s disappearance. Turkey has demanded permission to search the Saudi consulate. The situation is beginning to be about more than just a single journalist. Relations between Turkey and Saudi Arabia have been tense for some time, and their continued degradation will affect the entire region.
What next in Bosnia-Herzegovina? The unsatisfying answer is no one really knows. Elections took place on Sunday without too much controversy, but the issue was never the elections themselves but whether their results could be implemented. The problem goes back to a 2016 ruling of the Constitutional Court, which said parts of the election laws pertaining to the Federation of Bosnia-Herzegovina were unconstitutional. The court gave Bosnia’s parliament six months to amend the rules, but when it failed to change them the court officially struck them down in July 2017. That the rules remain unchanged has cast doubt over whether there is a legal basis for establishing the House of Peoples, the upper parliamentary body in the Federation of Bosnia-Herzegovina. In short: There’s been an election, but it’s unclear what happens now that officials have been elected. It’s an unprecedented situation for such a volatile part of the world. When institutions fail here, chaos reigns.
Italy remains defiant – of the European Union and of Germany. In an interview with Italian newspaper Corriere della Sera, Deputy Prime Minister Luigi Di Maio made a hell of a statement: He said he’s not worried about the European Commission’s objections to Italy’s budget because “in six months time this Europe will be over and done with.” Di Maio is referring to upcoming European Parliament elections – which he believes will result in the rejection of EU austerity measures. It wasn’t all tough talk, though. Di Maio also said Italy was open for dialogue on the budget deficit issue and insisted that its membership in the EU and the eurozone were not in question. Italy is meanwhile in another migrant dispute with Germany. Another Italian paper, La Repubblica, recently reported that Germany was going to fly refugees back to Italy, prompting an angry response from Italy’s interior minister, who vowed to close the country’s airports to any planes carrying migrants. The minister has since denied the existence of any refugee transfer plan, but the episode goes to show how far apart Italy and Germany are on the issue.
- Levada, a Russian polling organization, reports that Russian President Vladimir Putin’s trust rating declined to 39 percent in September – the lowest since June 2013.
- As many as “tens of thousands” of people marched in favor of Scottish independence in Edinburgh over the weekend, according to the BBC.
- Israeli Prime Minister Benjamin Netanyahu said he would meet with Russian President Vladimir Putin “soon.” It would be their first meeting since a Russian plane was downed in Syria.
- Sudan halved the official value of its currency against the U.S. dollar, its third devaluation this year.
- It appears as though India will continue to purchase Iranian oil in November without a sanctions waiver from the U.S.
- The Islamic State has claimed responsibility for four attacks targeting Shiites in Iraq. It claims to have killed more than 50 people, though local media put the figure closer to five.
- Politico reports that China has canceled several infrastructure grants and loans to the Philippines, perhaps to put pressure on the Philippines to agree to a joint oil exploration deal with China.