North Korea’s missile tests. North Korea launched two short-range ballistic missiles into the Sea of Japan early on Friday. The first, which traveled an estimated 430 kilometers (270 miles) at an altitude of just around 50 kilometers, appears to be another KN-23 – the solid-fueled missile that Pyongyang first tested back in May. This particular missile is important for two reasons. First, it represents another step forward in North Korea’s effort to develop missiles with solid-fuel engines, which are much easier to move, camouflage and launch quickly – and which could have major implications for its development of submarine-launched ballistic missiles. (It’s notable that the test came just two days after North Korean state media showed Kim Jong Un checking in on the construction of a new submarine.) Second, the KN-23 is believed to be a clone of Russia’s Iskander missiles, which can fly on a low trajectory with a greater degree of maneuverability than most ballistic missiles, posing major challenges for missile defense systems. Notably, the second missile, which flew some 690 kilometers, is a new type of missile. It flew at the same altitude at the first, but with the range to potentially put U.S. bases in Japan in the crosshairs. It’s tempting to interpret every North Korean missile test as intended to increase pressure on the Trump administration in the nuclear negotiations. And, indeed, this one came as U.S. national security adviser John Bolton was visiting South Korea, and it follows North Korean grousing about upcoming U.S.-South Korean military exercises and frustration over U.S. inaction on sanctions relief. But North Korea has practical reasons to do these tests, which are critical to the development of more sophisticated missiles. And after the May tests, the U.S. effectively made it clear that so long as it doesn’t test intercontinental ballistic missiles, Pyongyang is free to test as many shorter-range missiles as it likes.
Italy’s budget. The Italian government is accelerating plans for its 2020 budget, aiming to get a draft done well in advance of the European Union’s mid-October deadline, Prime Minister Giuseppe Conte said on Wednesday. Conte also said the government was trying to avoid having to increase the value-added tax as mandated by a safeguard clause intended to keep the budget deficit in check. Instead, Rome will count on higher tax revenue while cutting spending and reviewing tax incentives. This was all to be expected. What’s surprising, however, is that League party chief and Deputy Prime Minister Matteo Salvini seems already to be paving the way for a retreat on his party’s proposal to implement a flat tax next year. Earlier this month, Corriere della Sera reported that the proposed 15 percent flat tax rate might apply only to “incremental income” – income that exceeds an individual’s reported income of the previous year. In an interview with Il Sole 24 Ore published Thursday, Salvini acknowledged that the flat tax could not be implemented right now, saying, “We can’t do everything for everyone right away.” Another standoff is sure to come later this year between the European Commission and the Italian government on the 2020 budget – which may be why the government is talking about moving up the drafting process – but it’s odd to see Rome already apparently softening its position.
Britain’s new prime minister. British Prime Minister Boris Johnson isn’t easing quietly into his new post. On Wednesday, surrounded by his new Cabinet – featuring 17 new ministers, most of them hard-line Brexiteers – he pledged to deliver Brexit within 99 days, “no ifs, no buts,” and ordered the government to prepare for a no-deal scenario. With Parliament able to block a no deal or call a no-confidence vote, he’s unlikely to be able to convince Brussels of his willingness or ability to crash out of the union without an agreement – and thus faces long odds in getting the EU to agree to a substantially better deal than what his predecessor got. (And there’s been no reason to believe the EU would offer significant compromises anyway.) Thus, speculation is mounting that the Johnson government is eyeing new elections ahead of the self-imposed Halloween deadline. This, combined with Scottish First Minister Nicola Sturgeon’s renewed call for an independence referendum, suggests London will remain bogged down with internal matters for the foreseeable future.
But pressing foreign policy issues are mounting. The U.K.-led effort to form a European coalition to protect oil tankers in the Middle East is struggling to gain traction. The ability of the Royal Navy to sustain major operations abroad is in question following reports that nearly half of its fleet of frigates and destroyers is inactive due to long-term repairs. Iran is still holding a British oil tanker hostage, though on Thursday it hinted at a willingness to swap it for the Iranian tanker being held in Gibraltar. And if it’s serious about a no-deal withdrawal, London will need to scramble to have trade deals ready to ink with major economies outside Europe as soon as it leaves the bloc. This explains Johnson’s comments on Wednesday saying his government would be very pro-China and “very enthusiastic” about China’s Belt and Road Initiative.
- An agreement has been reached to release a number of Ukrainian sailors who were detained and imprisoned by Russia in November 2018 following the Kerch Strait incident.
- Ukraine’s special operations forces will phase out the use of all Soviet-era weapons and fully integrate into NATO’s security system in 3-4 years, according to a Ukrainian military commander.
- Russia is resuming so-called humanitarian convoys to Donbass. The 85th convoy of the Russian Ministry of Emergency Situations has already arrived in Donetsk and Luhansk.
- Russian President Vladimir Putin has lifted some special economic measures against Turkey that the government had imposed in 2015 after the Turkish military downed a Russian bomber flying over Syria. Agreements on how and when citizens can visit each other’s countries were also partially renewed.
- Germany’s Ifo Institute said its business climate index dropped in July to 95.7 from an upwardly revised 97.5 last month. The index has fallen for four consecutive months and is at its lowest level since April 2013.
- Scottish First Minister Nicola Sturgeon sent a letter to new British Prime Minister Boris Johnson highlighting the potential economic damage to Scotland of a disorderly withdrawal from the European Union. The note also said Scotland would continue to prepare for an independence referendum.
- The governor of Puerto Rico resigned last night following 10 days of protests calling for him to leave office. Leading the list of grievances were suspected corruption and gross mismanagement of Hurricane Maria recovery efforts.
- Chile’s legislature passed a new law to finance the country’s military. In doing so, it ended a six-decade-long practice of having state-run copper company Codelco put 10 percent of export profits toward military funding.
- Protesters in Hong Kong said they would hold a demonstration Saturday to denounce mob attacks by unknown assailants on opposition marchers.
- Japan and the U.S. launched three days of trade talks.
- U.S. President Donald Trump said Mexico may send more troops to the U.S. border.
- The U.S. sailed another warship through the Taiwan Strait.
- South Korean chipmaking giant SK Hynix admitted Japan’s curb on exports of critical semiconductor materials may pose production problems, saying its second-quarter profits fell 89 percent.