Editor’s note: Tomorrow is Thanksgiving, so in the spirit of the occasion we have decided to give our staff a much-needed break to spend time with their friends and families. Today’s Daily Memo will be the last one we produce this week, but rest assured, we’ll be back Monday, bright-eyed, bushy-tailed and better than ever. To our readers who celebrate Thanksgiving and to those who do not, we offer our heartfelt thanks for your continued readership. See you Monday.
Iran won’t back down. Squeezed by sanctions, the government in Tehran is trying to strengthen ties with allies in the Middle East. Its defense minister recently traveled to Syria, a visit meant to demonstrate its continued support of Bashar Assad and to reiterate to Russia, its sometimes-partner in Syria, that their interests are still largely aligned. Russia, for its part, expressed its support of the Iran nuclear deal, adding that it probably wouldn’t pressure Iran to reduce its presence in Syria in exchange for sanctions relief – one of the intended effects of U.S. sanctions in the first place. The Iranian government also met with Turkish officials to discuss joint military operations. The two have discussed security cooperation before, and though they signed only a memorandum of understanding in this most recent meeting, the United States won’t take kindly to Iranian advances on a coveted ally. Washington is, after all, trying to persuade Turkey to support the Syrian Democratic Forces. Meanwhile, Iran has tried to shore up support in Iraqi Kurdistan. It sent a military delegation to Sulaymaniyah, where representatives signed agreements on border security. Tehran also sent a political delegation to Kurdistan to study the possibilities of boosting trade. Put simply: As the U.S. and its allies try to contain Iran, Tehran’s evasive maneuvers are getting more creative.
As the trade war rages, China courts the EU. China’s top trade negotiator, Vice Premier Liu He, will meet with EU officials next week to discuss financial affairs. Beijing is especially eager to improve financial and trade ties with Germany, which is also feeling the effects of U.S. trade policy. The visit comes just after Brussels provisionally agreed to coordinate union-wide efforts to scrutinize foreign investment in strategic technologies and infrastructure. (Relatedly, the U.S. Commerce Department just proposed more restrictions on the export of security-related technologies.) China has been actively seeking this very kind of investment, which it needs to develop high-tech industries. The problem is, the EU is wary of Chinese business practices and keenly aware of their long-term implications, especially on matters of national security. But what options are left for Beijing? Any expectation that it would reach an understanding with the U.S. at the upcoming G-20 summit has been dashed. The U.S. trade representative announced that a recent review showed China failed to address its unfair and market-distorting trade practices. A member of President Donald Trump’s Council of Economic Advisers went so far as to suggest expelling China from the World Trade Organization. Time isn’t exactly on China’s side.
A test for Uzbekistan’s economic reforms. The International Monetary Fund warned the Uzbek government that its economy is showing signs of overheating. The news could be cause for concern for Uzbekistan. The country depends on foreign trade to drive growth and is struggling with high inflation, which is expected to rise to 17 percent next year because of increases in public wages, energy prices and indirect taxes. To try to get ahead of these challenges, the government in Tashkent has threatened sanctions on filling stations that don’t comply with natural gas price controls and called for prioritizing structural changes to the Uzbek energy sector. A lackluster global economy means the pressure is on for Tashkent to make the necessary reforms before a downturn takes hold. Uzbekistan’s success or failure in this endeavor will influence other countries in the region as they decide how to modernize their economies.
- As expected, the European Commission recommended disciplinary measures against Italy over its budget plans.
- The incoming head of the European Central Bank’s Single Supervisory Mechanism warned that eurozone banks probably won’t survive another financial crisis unless they clean up bad assets and mend market fragmentation.
- Gazprom lowered its 2018 investment for Nord Stream 2 to 92.18 billion rubles ($1.4 billion), a cut of about 22.3 billion rubles. The company also lowered investments in the Turkish Stream project.
- The European Commission has approved Greece’s first post-bailout budget. The commission said, however, future debt relief measures would depend on speeding up reforms.
- Russia called for Turkey to quickly reach a decision over a demilitarized zone in Idlib, a necessary move to preserve the September agreement.
- Indian and Chinese officials will meet Nov. 24-25 for the next installment of talks to resolve border disputes.
- Colombian President Ivan Duque said that Bogota will end diplomatic relations with Venezuela in January.
- The Cuban government is studying the EU’s proposal to circumvent sanctions on Iran for tips on how it can get around the U.S. embargo on Cuba.