Sabotage in the Persian Gulf. The United Arab Emirates’ Foreign Ministry reported on Sunday that four commercial vessels had been targeted by what it called “sabotage operations” near its territorial waters. Then, earlier today, the Saudi minister of energy, industry and mineral resources said that two Saudi oil tankers bound for the United States had also been sabotaged. Wandering eyes immediately turned to Iran, but none of the countries that condemned the supposed attack singled out Iran as the culprit. If Iran is guilty, it certainly isn’t acting that way. On Sunday, Iranian media reported “powerful explosions” at the Emirati port of Fujairah, while an Iranian Foreign Ministry spokesperson characterized the event as “worrying” and called for more details. Meanwhile, Iranian-backed Houthis in Yemen reportedly began to withdraw from the port city of Hodeida, though at least one Yemeni government official called the withdrawal a “sham,” and the head of Iran’s Islamic Revolutionary Guard Corps told Iran’s parliament on Sunday that he did not expect war to start between Iran and the U.S. Given the circumstances, both are signs that, at least for now, Iran is not trying to stoke an already tense situation.
Japan’s economy. The Japanese government’s Cabinet Office announced that its index of business conditions for March fell 0.9 points, landing at 99.6 (100 is a baseline figure from 2015). The index is a combination of readings that include factory output, employment and retail sales, all of which were reported to be on the downswing. Japan won’t release its official first quarter gross domestic product data until May 20, but the last time the Cabinet Office used the language of its economy “worsening,” it was during October 2012-January 2013, when the economy was in recession. The news is not good for Japanese Prime Minister Shinzo Abe, who has plans to raise consumption taxes in October and who also is trying to negotiate new trade terms with the U.S. (It also contrasts starkly with the more optimistic trade data out of Germany.)
Still, things could always be worse: Pakistan and the International Monetary Fund reached a staff-level agreement on a bailout deal worth approximately $6 billion. Pakistani Prime Minister Imran Khan had initially opposed the idea, preferring instead to attract alternate sources of funding from countries like Saudi Arabia and China. Except that the support from those other countries was not enough to help Pakistan muscle through a period of slowed growth (from 5.2 percent in 2018 to an IMF-projected 2.9 percent this year), rising inflation (reaching a five-year high of 9.4 percent last month), $27 billion of external debt coming due in the next two years, and a looming potential balance of payments crisis (latest statistics on Pakistan’s foreign reserves indicated the country had only $8 billion left in foreign reserves). The deal with the IMF – Pakistan’s 13th round of financing from the organization in 30 years – addresses some of the immediate causes of Pakistan’s financial precarity. But, tellingly, it also exposes the weakness of Pakistan’s would-be benefactors – namely, China.
Rationing in Cuba. The Cuban government announced Friday that it would begin rationing a wide range of staples and other basic products, including chicken, eggs, rice, beans, cooking oil and soap – a consequence of longer-than-usual shortages of certain products, according to the commerce minister. Economic pressure from the U.S. is at least partly the cause of Cuba’s current situation. After all, Venezuela’s state-run oil company PDVSA has cut back shipments of subsidized fuel to Cuba by roughly two-thirds. The Trump administration’s stance on Cuba in general has also made it more difficult for Cuba to import food from U.S. producers. There’s little to suggest the situation in Cuba is out of control or even dire, but it’s also not looking good in the short-term.
- China has announced that it would raise tariffs ranging from 5 percent to 25 percent on $60 billion worth of U.S. goods.
- Germany says it is working on maintaining a legitimate and legal trade channel with Iran.
- Israel reopened the border crossings with the Gaza Strip and allowed a Qatari envoy to deliver $30 million as part of the terms of last week’s cease-fire.
- North Korean state TV reports that average precipitation across the country in the January-May period was the lowest recorded since it began keeping track.
- Uzbekistan has restored access to a number of foreign news outlets, including Voice of America, BBC and Deutsche Welle.
- Namibia’s president has declared a national state of emergency in response to a drought.
- Turkey’s treasury and finance minister said the Turkish economy will fare well for the rest of the year, noting projected growth in employment and lower inflation rates. We’ll believe it when we see it.