Crisis averted? On Friday, U.S. President Donald Trump confirmed via Twitter that retaliatory strikes were imminent against Iranian military targets when the administration suddenly pulled back. According to Trump, the Pentagon estimated that 150 people would be killed in the strike, which he deemed a disproportionate response to the downing of an unmanned drone. Though the immediate threat of a U.S. strike would seem to be over now, the USS Leyte Gulf guided-missile cruiser and other military assets remain in the area on 72-hour standby, Newsweek reported. Newsweek also said, citing an anonymous Pentagon official, that one of the targets was an SA-3 Goa surface-to-air missile system that the U.S. believes was responsible for shooting down its drone on Thursday, contrary to Iranian assertions that a domestically produced Third of Khordad was used. The Iranian and U.S. narratives also still diverge on where the RQ-4A Global Hawk drone was flying at the time of the attack: Iran has offered at least two different locations, but the most-cited one is about 13 miles (21 kilometers) from the location given by the Pentagon.
Trump did not outline a plan of action, saying only that the U.S. had the best military in the world and that sanctions against Iran were “biting,” seeming to indicate that the White House favors the status quo. Unnamed Iranian officials told Reuters that Trump had communicated to them via Oman before news of the pullback broke that a strike was imminent but that he opposed war and wanted to negotiate. The Iranians, Reuters said, oppose talks but acknowledged that it was ultimately the decision of Supreme Leader Ayatollah Ali Khamenei. For now, the situation is still in flux.
Xi in North Korea. Some 250,000 flag-waving North Koreans lined the streets for Chinese President Xi Jinping’s arrival in Pyongyang, marking the first state visit by a Chinese leader since Kim Jong Un was in college. (This is Xi and Kim’s fifth meeting over the past year.) On Friday, Xi pledged to play a “positive and constructive role” in denuclearizing the Korean Peninsula. China’s position here has been more or less the same for the past few years: It would prefer that North Korea not have nukes. And as North Korea’s only major ally and indispensable economic lifeline, it has more leverage over Pyongyang than basically anyone else. But it would be a mistake to assume Beijing could bring about denuclearization unilaterally. Its main priorities are keeping the U.S. and its allies off the Yalu River, dismantling the U.S. alliance structure in Northeast Asia, and preventing a regime collapse in Pyongyang that could lead to a flood of refugees that destabilizes northeast China. Hence why China has worked to prevent sanctions from intensifying to the point that they would undo Pyongyang – all while probing for opportunities to exploit divisions between the U.S., South Korea and Japan over the issue. The trip to North Korea is clearly timed to claw back some leverage in trade negotiations with Washington ahead of Donald Trump and Xi Jinping’s planned meeting next week on the sidelines of the G-20 summit. But don’t expect the visit to change much for either North Korea’s nuclear arsenal or the trade war.
Salvaging trade talks. Ahead of the Xi-Trump meeting, the Chinese and U.S. trade delegations are reportedly scrambling to revive negotiations in the hopes of avoiding leaving Trump and Xi with nothing of substance to show for their efforts. Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to meet Tuesday. To enhance its prospects of a deal, the U.S. is reportedly delaying imposing new sanctions on China over its draconian crackdown on Uighur Muslims in Xinjiang. But considering negotiations have been on ice since the U.S. hiked tariffs in May, the idea that a deal will be completed next week is a bit optimistic. Unless Xi has been able to resolve the political hurdles keeping Beijing from following through with whatever the U.S. thought Beijing had agreed to, the most that is possible next week is a sort of “cease-fire” like what was reached in December in Argentina, with the U.S. agreeing to delay new tariffs on $300 billion in Chinese exports and Beijing agreeing to return to the negotiating table. Over the long term, we still think both sides have ample interest to reach a limited deal, but the mechanics involved with getting to that point are complicated, to say the least.
Georgia protests. Protests unexpectedly erupted in Georgia on Thursday, culminating in the resignation of the parliamentary speaker on Friday. It started when Russian State Duma Deputy Sergey Gavrilov, who was visiting the Georgian parliament as part of a delegation for the 26th General Assembly of the Inter-Parliamentary Assembly of Orthodoxy, started speaking in Russian while sitting in the parliamentary speaker’s seat. Hundreds of people – both protesters and security personnel – were injured in the ensuing protests, which local media estimated included about 10,000 participants. Georgian President Salome Zurabishvili suggested that a Russian fifth column had helped launch the protests, saying on Facebook that Moscow alone benefits from Georgia’s divisions. Russian officials, on the other hand, called the protests “Russophobic provocations” and expressed concern for the safety of Russian tourists in Georgia. The Georgian opposition is calling for more protests on Friday evening.
- Saudi air defenses have shot down a drone launched by Yemen’s Houthi rebels toward the southern Saudi city of Jizan, the Saudi-led Arab military coalition in Yemen has said.
- The same coalition said on Friday it had struck targets around the port city of Hodeida belonging to the Iran-aligned Houthis.
- Sri Lanka’s Finance Ministry said Colombo is seeking yet another loan of nearly $1 billion from China for energy and motorways.
- Trump and Canadian Prime Minister Justin Trudeau ordered officials to craft a plan for bilateral collaboration on “critical minerals.”
- On Thursday, European Union leaders agreed to extend economic sanctions against Russia until the end of January 2020.
- Honduran President Juan Orlando Hernandez deployed the country’s military across the nation with instructions to maintain domestic order after the latest round of public protests left two people dead.
- The Federal Aviation Administration has issued a ban for American carriers from flying in Persian Gulf airspace where Iran handles air traffic control.
- Turkey is sending a second gas drillship to Cyprus’ eastern coast, which generally supports our 2019 forecast on Turkey’s greater drilling activity in the eastern Mediterranean.