China completes the nuclear triad, developing a “global force.” On Thursday, the Pentagon released its annual report to Congress on the state of the Chinese military. It sheds light on a number of strategic and military modernization trends we’ve been watching closely. For example, it emphasizes that the Chinese navy is gunning for a full-time presence in the Indian Ocean basin and even the Arctic Ocean. It warns about possible military dimensions of the Belt and Road Initiative, the race for dominance in 5G, and China’s pursuit of hypersonic anti-ship missiles. This year’s report placed heavier emphasis than past years’ on China’s use of its coast guard and so-called “maritime militia” in grey zone operations in the South and East China seas – an emphasis reflected in the U.S. Navy chief’s recently reported warning to Beijing that the U.S. was preparing to start treating coast guard and armed fishing vessels as combatants. Finally, it concludes that Chinese ballistic missile submarines have advanced enough to pose a credible sea-based nuclear deterrent.

A heavy crown. New Thai King Maha Vajiralongkorn Bodindradebayavarangkun will be coronated in a lavish three-day ceremony beginning on Saturday. As we discussed following the unusual abdication of Japanese Emperor Akihito on Wednesday, reigns of monarchies – even ones like Japan’s that have little formal influence over policy and generally try to float above the political fray to preserve their legitimacy with the public – can provide subtle insights into the cultural shifts and political currents that shape a country’s power structures and geopolitical behavior. In Thailand, the task ahead for the 66-year-old Vajiralongkorn is particularly tricky. He lacks the public adoration enjoyed by his father, King Bhumibol Adulyadej, whose 70-year reign restored the monarchy’s prestige, cemented a careful balance of power between the military, monarchy and political class, and (with some help from the U.S.) deftly guided the country through the Cold War – a period when monarchies around the globe were fading into irrelevance. But the economic boom and bust years that followed have exposed Thailand’s deep urban-rural divides, upset the internal political balance of power, and bred deep anxieties in the kingdom about Vajiralongkorn’s ability to fill his father’s colossal shoes.

Going for gold. Gold has become all the rage among central banks worldwide, according to the World Gold Council, with purchases rising 68 percent in the first quarter year over year to the highest levels in six years. Central bank purchases in 2018 were the second highest on record. Russia is leading the charge; over the past year, the Bank of Russia increased reserves of monetary gold by 14.9 percent, or by almost 275 tons, putting the country’s total gold reserves at more than 2,168 tons. The bank’s chief said Russia plans to diversify its investments in international reserves, taking into account all the risks, including financial, economic and geopolitical. But the Kremlin’s attempt to reduce its dependence on the U.S. dollar should also be noted here. China, too, began mining for ways to reduce its dependence on the U.S. dollar, resuming central bank purchases of gold in December for the first time in more than two years. This trend can’t happen on a scale great enough to really threaten the U.S. dollar; if anything, it demonstrates the complete absence of any potential challengers to the dollar’s status as the reserve currency – a substantial source of U.S. economic and geopolitical strength. But it could decrease U.S. leverage over countries worried about getting slapped with U.S. sanctions.

Placing parameters on a eurozone budget. Five eurozone countries, Finland, Ireland, Latvia, Lithuania and the Netherlands, along with non-eurozone states Denmark and Sweden, published a statement endorsing limitations on a planned eurozone budget. The signatories said the amount should be significantly less than the 22 billion euros (roughly $25 billion) currently envisioned. They also insisted that recipients adhere to European Union debt and deficit rules and respect rule of law, and they said the budget must function without regard to where a recipient is in the economic cycle (in other words, that it not be used to stabilize struggling economies but only to help foster “convergence and competitiveness”). None of these demands were unexpected, and it’s no coincidence that with the exception of the two Baltic states, all of the signees are among the wealthiest EU member states – and thus the least likely to need the assistance of the proposed instrument. But the statement serves as a reminder that Germany (not a signatory, for several reasons) is not the only impediment to ambitious French plans to reform the eurozone.

Honorable Mentions