Daily Memo: Italy vs. the EU, Australia vs. China, Russia in Venezuela

All the news worth knowing today.


“We’re not Greece.” Italy and the European Union appear to be digging in for another round of faux-hostilities over Italy’s public spending and debt issues. Last week, the European Commission asked Italy to explain the rise in Italian public debt in 2018. Italy’s economy minister pinned the problem on an economic downturn and promises to enforce EU fiscal rules in Italy’s next budget. Italian daily La Republica reported on Sunday, however, that the European Commission wasn’t satisfied with Italy’s explanation and that it was “almost inevitable” that the EU would begin disciplinary procedures against Italy this week. The EU Economic Commissioner said on Sunday that while he preferred dialogue to punishment, if Italy does not respect EU rules, the bloc will have to act. This was met with predictable outrage among some Italian officials and even whispers of a possible introduction of a parallel Italian currency. Italy’s prime minister, Giuseppe Conte, has called a press conference for later today reportedly to threaten resignation if his own government cannot get on the same page in dealing with the EU to avoid being hit with sanctions. The chairman of Italy’s house budget committee was right when he said that Italy isn’t Greece, but it’s worth also pointing out that the Italian economy is 10 times as big as the Greek economy.

The South Pacific. Newly re-elected Australian Prime Minister Scott Morrison told reporters this morning that the three Chinese warships that arrived at Sydney Harbor this morning were on a reciprocal four-day visit approved by his government. He cautioned that their visit should not be over-analyzed – but his pleas fall on deaf ears at GPF. Indeed, it is hard not to scrutinize the Chinese navy’s sudden visit to Sydney considering last week’s reports that Australian military helicopters were forced to land during operations in the South China Sea after laser attacks launched by Chinese militia vessels, a charge China’s Defense Ministry fiercely denied. As for the prime minister, he is currently in the Solomon Islands, making the small and strategically located Pacific island nation his first official visit after the election. There, Morrison will announce $250 million in infrastructure investments and a $250 million grant to a program designed to help island residents get work in Australia – all to make sure that Australia, not China, is the country’s international partner of first choice. The competition between the two countries is very real, even if they appear friendly on the surface.

Russia in Venezuela. Russia is withdrawing key defense advisers from Venezuela and Russian state defense contractor Rostec has cut its staff in Venezuela from 1,000 to just a few dozen, according to a Wall Street Journal report. The report also suggested that, after Rostec had completed construction of a helicopter training center in March, other projects such as the construction of a Kalashnikov production facility had been put on hold because the company doubted the Maduro government’s ability to pay up. Rostec told Interfax news agency on Monday that there was no truth to the report – that its presence in the country hadn’t changed. Russia’s ambassador to Venezuela also said the story was unfounded, telling RIA Novosti there had been no talk of backing out of commitments or cutting back Russian personnel. In the absence of reliable information either way, we would add that it would not make sense for Russia to withdraw in this manner now, especially considering the resilience the Maduro regime has exhibited in recent months.

A new Islamic State campaign. The Islamic State declared a new campaign called “Raid of Attrition” over the weekend. It’s easy to dismiss the reports as rumor or exaggeration, even when they come from the group’s semiofficial Amaq News Agency, so prone is the group to hyperbole. Even so, previous IS campaigns in 2012 and 2013, which led to IS takeovers of large swaths of Syria and Iraq, were also preceded by similarly haughty announcements. And the current state of play in the Middle East benefits the Islamic State, which is one of the biggest beneficiaries of the breakdown of relations between the U.S. and Iran. There is simply more attention placed on Tehran than there is on the would-be caliphate. After the announcement, IS militants carried out three attacks inside their old capital city of Raqqa, claiming to kill as many as 35 Syrian Kurdish fighters. There have also been attacks in Pakistan and Afghanistan undertaken under the banner of the new campaign. IS is down but not out, and current conditions, especially in the Middle East regions where IS has enjoyed its best success, are trending toward the sorts of conditions that led to its rise in the first place.

The U.S. reaches out to Iran. U.S. Secretary of State Mike Pompeo said on Sunday that the Trump administration was willing to negotiate with Iran without preconditions. Iran is not impressed. Its president, Hassan Rouhani, responded by criticizing Washington’s “contradictory” remarks, saying it was incumbent upon the United States to fulfill its previous commitments before Iran would be willing to sit back down at the negotiating table. Meanwhile, an Iranian army commander told Tasnim News Agency that Iran’s defense and missile programs were non-negotiable. The U.S. seems committed to the appearance that it would prefer to open up a dialogue with Iran, but despite the economic damage Iran has already incurred, Tehran will need a heck of a lot more than a statement from a secretary of state to consider talking. There’s too much bad blood for that.

Honorable Mentions

  • Kim Yong Chol, the North Korean diplomat who was reportedly executed over the failure to reach a deal with the U.S. at the Hanoi summit, does not appear to be dead.
  • The emir of Qatar met with a Hamas delegation over the weekend.
  • The Indian navy deployed a long-range maritime surveillance aircraft to Oman to augment anti-piracy patrols in the region.
  • In response to two rockets fired at the Golan Heights, Israeli forces launched airstrikes at the T-4 airbase in Homs province and near southwestern Damascus over the weekend.
  • The U.S. deployed an F-16C fighter squadron to Poland for a bilateral training rotation.
  • Canada announced on Sunday that it is temporarily closing its embassy in Venezuela.
  • An IHS Markit survey showed that German manufacturing companies were exhibiting “an increased willingness to trim staffing capacity.”