“Sometimes you have to walk.” The much-anticipated summit in Hanoi, Vietnam between North Korean leader Kim Jong Un and U.S. President Donald Trump ended early without an agreement. North Korea asked for full sanctions relief, which would have cost the U.S. most of its leverage. The enormity of North Korea’s demands a suggests that Kim believes he is holding all the cards, and Trump’s sudden departure suggests he is calling Kim’s bluff. Notably, however, U.S. Secretary of State Mike Pompeo said that the freeze-for-freeze agreement on military exercises will remain in effect.
China’s disappointment. The Hanoi summit may have dashed some (unfounded) optimism in Beijing. There’s been mounting speculation – fueled by a slew of White House leaks about Trump’s growing impatience with his trade team’s struggles to extract major concessions from China – that the president would be willing to sign a deal that fails to address Washington’s top concerns while giving up the leverage it had over Beijing. Yes, political calculations affect these sorts of negotiations, and yes, Trump has an interest in living up to his self-cultivated image as a master dealmaker. But the truth is that the U.S. can afford to take its time on China and North Korea. And unlike Pyongyang, Beijing can’t as easily do the same. Still, U.S. Trade Representative Robert Lighthizer told Congress on Wednesday that the U.S. and China had agreed on a process for enforcing a trade agreement. This is important because China’s ambassador to the U.S. said the structural reforms to China’s economic and trade policies that the U.S. is advocating for could take five to 10 years to enact. This is a timely reminder that neither the U.S. standoff with China nor the North Korea nuclear crisis will be fully resolved anytime soon.
India’s economic growth slows. With all the attention being paid to conflict in Kashmir, it’s easy to forget India’s sluggish economic performance. Economic growth clocked in at just 6.6 percent in the fourth quarter of 2018, compared with 7 percent the previous quarter and 8 percent the quarter before that. Meanwhile, Indian banks are selling government bonds at the fastest pace in the past three years – which could drive up borrowing costs. Both developments come before India’s general election in May. Last year, the ruling Bharatiya Janata Party performed much worse than expected in state and local elections, so it’s under more pressure to perform well this year than it did in the last general election. Don’t be surprised if the Kashmir crisis becomes a rallying cry in the meantime.
Developments in the South Caucasus. There have been several recent developments here that are worth keeping an eye on. Armenia has signed a data transfer agreement with Iran and Qatar that will facilitate cooperation between regional telecommunication companies, create an internet transit link and facilitate the exchange of IT and cybersecurity products. Iran is also working to increase gas supplies to both Georgia and Armenia. Today in Warsaw, the speaker of the Georgian parliament met with Poland’s prime minister, and Georgia’s potential membership in the European Union and NATO was among the topics discussed. Moscow will be watching the talks closely, as Georgia’s desire to join Western institutions partly motivated Russia’s invasion of the country in 2008.
- At a meeting of defense officials, Russian Defense Minister Sergey Shoigu said Russia will need to respond to the buildup of NATO forces on its border.
- Turkey launched its largest maritime drill, which will take place in the Black Sea, the Aegean Sea and the Mediterranean Sea. More than 100 military vessels, several jets and military helicopters, and thousands of soldiers will take part in the drills.
- Eight tons of gold were removed from Venezuela’s central bank and will be sold abroad, according to opposition lawmaker Angel Alvarado.
- The head of Germany’s cybersecurity agency said he supported the idea of a “no-spy” deal with Chinese tech firm Huawei to relieve concerns about using the company’s equipment in building a 5G network. In Britain, the CEO of British chip maker Arm warned that delays in building 5G networks across Europe would have a detrimental effect on the economy.