Hong Kong concessions are “too little, too late.” Hong Kong Chief Executive Carrie Lam’s surprise move on Wednesday to withdraw the extradition legislation that sparked Hong Kong’s summer of discontent has, thus far, done little to restore stability. Protesters quickly rejected the move this as “too little, too late,” and reiterated that their demands had long since expanded to include things like amnesty for arrested protesters, an independent review of police conduct and free elections. Small-scale protests have continued over the past few days, with plans for a major protest aimed at disrupting train service to the airport on Friday. During a trip to the mainland on Friday, Lam said the measures announced Wednesday were merely a “a first step,” suggesting that the Hong Kong government has been given the green light from Beijing to dangle additional concessions if necessary. (Xi Jinping’s most trusted crisis resolver, Vice President Wang Qishan, is believed to have met with Hong Kong leaders in Guangdong last week.) Some of the protesters’ demands – free elections, in particular – are non-starters, but the Hong Kong government and Beijing could likely find a way to tolerate the others. Hong Kong would rather avoid a series of high-profile trials of the thousands of protesters arrested, making at least a limited amnesty deal attractive. The government is just keen to see first if the extradition concession succeeds in further reducing mainstream support for the protests – a patient divide-and-conquer approach that worked in 2014. But this time around, Beijing has signaled that it wants the protests contained, if not put to rest all together, well ahead of Oct. 1, which marks the 70th anniversary of the founding of the People’s Republic of China. Of course, it doesn’t want to be waging a violent crackdown during these celebrations either, so if Beijing is going to make a major move, expect it in the next two weeks.
Iran’s next move. Iran announced on Friday that it formally removed all limits on centrifuge research and development imposed under the Joint Comprehensive Plan of Action. This indicates Tehran is following through on threats it made Wednesday to accelerate uranium enrichment if European powers failed to do more to ease pressure on Iran from U.S. sanctions. Germany, France and the U.K – all signatories of the 2015 nuclear deal – each condemned the move but also sought to make clear that it’s not too late for Tehran to change course. The U.S., too, is continuing to keep the door open for revived negotiations. On Friday, U.S. Defense Secretary Mark Esper said Tehran was inching toward a place where talks could be held. Earlier, U.S. President Donald Trump signaled a willingness to meet with Iranian President Hassan Rouhani at the upcoming U.N. General Assembly in New York. But the U.S. remains staunchly opposed to any sanctions relief as a precondition for the talks – including relief measures implemented by Europe. On Wednesday, for example, the U.S. special representative for Iran signaled that the U.S. would not support a French proposal to offer Iran a $15 billion line of credit, secured by oil, in return for its full compliance with the nuclear deal. Tehran presumably has little real hope of Europe coming to its rescue. So, it’s perhaps better to view these moves as focused mainly on expanding the negotiating pie in preparation for potential talks with the U.S.
Brexit drags on. Former British Prime Minister Theresa May’s version of a Brexit deal was voted down three times by huge margins, and yet an agreement has never seemed so far away as it does under her successor. Boris Johnson’s government is seeking a “best-in-class” free trade agreement with the European Union – whatever that means – but simultaneously wants to cast aside the May government’s pledges to maintain a “level playing field” with European Union economies. Given the U.K.’s proximity to the EU and the size of the British economy, this isn’t going to fly in Brussels or EU capitals, which are very sensitive to the risk of giving British businesses a competitive advantage over their own firms. In a possible attempt to turn up the heat, the British government is also reportedly seeking a looser defense relationship with the EU than the one envisioned by its predecessor. Details are too scarce to conclude much from this threat, but it is unlikely to sway Brussels and may in fact be counterproductive for the U.K., which needs to be involved in the development of defense policy on the Continent. As for what comes next, legislation forcing the British government to request an extension of negotiations if there is no agreement with the EU by late October looks certain to pass the House of Lords by week’s end, and the government’s efforts to trigger new elections before exit day on Oct. 31 are foundering. We expect the EU would grant another delay; whether an election will substantially change the balance in British politics is another matter.
- Iraq’s Foreign Ministry announced that the Arab League will write off 75 percent of Iraqi debt owed to the group.
- Global credit rating agency Fitch on Friday downgraded Hong Kong’s long-term foreign currency issuer default rating to “AA” from “AA+”.
- Russian President Vladimir Putin said formalizing a peace deal with Japan over the Kuril Islands would be difficult given Japan’s close defense relationship with the U.S.
- Kazakh President Kassym-Jomart Tokayev dismissed concerns over Chinese land purchases and encroaching business ventures in the country, calling them rumors and stressing Kazakhstan’s need for investment.
- The People’s Bank of China announced a reduction in the amount of funds that banks are required to hold in reserve in an effort to boost lending.
- The International Monetary fund moved up the date of its technical mission to Pakistan from November to mid-September over concerns regarding the government’s failure to reduce its primary budget deficit.