Escalation in the Gulf. Iran shot down a U.S. military drone on Thursday, U.S. officials confirmed. Iran says the drone – which the U.S. confirmed was an RQ-4A Global Hawk, an extremely large, expensive and decked-out vehicle – was flying over Hormozgan province and thus was in Iranian airspace. The U.S. says it was in international airspace over the Strait of Hormuz. The attack came just hours after Iran-backed Houthi rebels in Yemen fired a missile that hit a Saudi desalination plant, and a day after a rocket struck an oil compound in southern Iraq used by ExxonMobil and other foreign oil firms.
Iranian officials said the downing of the drone sent a “clear message” that Iran’s airspace was a red line. On Tuesday, the vice chairman of the U.S. Joint Chiefs of Staff, Air Force Gen. Paul Selva, sent a message of his own, saying the U.S. would need international consensus before using force to protect international shipping with the caveat that “if the Iranians come after U.S. citizens, U.S. assets or U.S. military, we reserve the right to respond with a military action.” On Monday, the White House announced that it was sending 1,000 additional troops to the Middle East, including a Patriot battalion, manned and unmanned surveillance aircraft, and other assets for “defensive purposes.”
This is not the first time Iran has targeted an American drone. In 2011, Iran brought down a U.S. RQ-170, and a year later two Iranian jets shot at a U.S. MQ-1 Predator. Just last week, the U.S. military said Iran had launched a missile at one of its drones as it was responding to the attacks on two oil tankers in the Gulf of Oman.
Dry in Chennai. The reservoirs in Chennai, India’s sixth largest city, have completely dried out. Groundwater over-pumping, lack of rain and poor water infrastructure are all partly to blame. The city’s 10 million residents must now depend on water trucked in from elsewhere. Sadly this isn’t the only region in India facing greater risks from water scarcity. Researchers at Columbia University and the University of Utah published a report showing that the rate of melting in the Himalayas’ glaciers has doubled over the course of the last two decades, compared to the period from 1975-2000, increasing the risk of water scarcity for the hundreds of millions that depend on the Himalayas as a critical source of water. The Indian government has started to discuss water conservation measures, but there remains a growing risk of social unrest and internal displacement.
Chinese real estate. The Shanghai E-house Real Estate Research Institute released a report showing that land purchase prices dropped for the first time since 2012. The average land price from January-May was 4,389 yuan ($640) per square meter, and marked a 3.5 percent decline in value compared to the same period in 2018. Floor space for real estate development enterprises was particularly hard hit. Residential developments led real estate developer investment, growing by 16.3 percent. This was offset, however, by investment in office space declining 3.6 percent and commercial usage space shrinking 9.7 percent. Land prices are part of the feedback loop in the Chinese economy that governments at all levels, particularly local, use to help artificially inflate economic activity.
- India’s navy launched Operation Sankalp to help reassure India-flagged vessels in the Persian Gulf and Gulf of Oman.
- The Democratic Republic of Congo deployed hundreds of soldiers to protect from illegal mining a copper and cobalt mine owned by China Molybdenum. Much of the global supply of cobalt comes from Congo.
- Japan’s Defense Ministry reported a violation of the country’s airspace by a Russian bomber in the southern prefecture of Okinawa and in Hachijo Island in the Philippine Sea.
- On Thursday, European Union leaders are expected to extend sanctions against Russia for another six months.
- Mexico’s Senate hosted an extraordinary session, during which it ratified the U.S.-Mexico-Canada Agreement with a 114-4 vote (and three abstentions). It is the first country to ratify the trilateral agreement.
- Argentine unemployment reached a 13-year high of 10.1 percent. Compared to a year ago, when unemployment was 9.1 percent, there are now 220,000 more unemployed urban workers.
- British monthly retail sales volumes contracted for the second straight month in May, fueling speculation that second-quarter growth will be flat or only just positive.