Updates on Venezuela. PetroChina will drop Venezuelan oil firm PDVSA as an equity partner in a joint refinery project in southern China. The company said its decision was due to PDVSA’s poor financial position, not to U.S. sanctions. The plant had been set to process 400,000 barrels of Venezuelan oil per day, but it will now expand capacity and will no longer be restricted to refining only Venezuelan oil. It’s a bad sign for Venezuela, which is already reeling from declining oil revenue.
Meanwhile, a spokesman for Russia’s Foreign Ministry said Moscow was ready to participate in Venezuela’s diplomatic affairs. Doing so would be a low-cost way for Russia, which stands by President Nicolas Maduro, to safeguard its financial and strategic interests there, however marginal they may be. It’s not so unusual for Russia to use a faraway region to stick it to the United States; it has, after all, frustrated U.S. efforts in places such as Syria and North Korea in the past year alone.
Challenges in Iran’s nuclear program. China has begun to renege on its commitments to help Iran redesign its heavy water nuclear reactor in Arak. The head of Iran’s atomic energy program said China pulled out for fear that continued cooperation could result in sanctions on Chinese nuclear companies. But Iran still hopes to move forward with its nuclear energy program. This week, it shipped 30 tons of uranium ore to its enrichment center at Isfahan for processing, though it’s unclear how quickly it can be processed. David Albright, a former nuclear inspector for the International Atomic Energy Agency, told the Jerusalem Post that all of Iran’s advanced nuclear centrifuges were failing, and that even its less advanced centrifuges failed 20-30 percent of the time. How quickly Iran would be able to “break out” – that is, enrich enough uranium to make a nuclear weapon – was one of the main concerns surrounding the preservation of the Joint Comprehensive Plan of Action. If it looks like the prospects are slim, European countries that still support the deal may be more willing to jump ship.
Signs of a European recession. Car production in the United Kingdom fell by 9 percent in 2018, its largest decline since 2009. Retail sales in Germany fell by 4.3 percent in December, the largest month-on-month decline in 11 years. The German economy minister called for the government to pursue policies that promote growth – such as energy efficiency and tax breaks for investment – to help stimulate activity. In Southern Europe, Italy is now officially in a recession. Its economy contracted for the second consecutive quarter in 2018, albeit by only 0.2 percent. And all this is taking place independently of Brexit, which is generating its own fair share of economic uncertainty.
More Gulenist pilots? Turkey has issued arrest warrants for 63 pilots suspected of supporting the 2016 failed coup, more than 40 of whom were helicopter pilots. There are only so many combat-trained pilots in the Turkish military, and training their replacements takes time. The shortage of pilots became severe enough that in 2017 Turkey was forced to recall commercial pilots from retirement to plug gaps in its air force. Turkey is positioned and threatening to move into northern Syria, so it would be a bad time to reduce its air capabilities.
- India is in talks with the U.S. to extend its waiver on Iranian oil export sanctions.
- The U.K. and Chile have signed a preferential trade agreement meant to maintain trade ties post-Brexit.
- China said it built a maritime rescue center on Fiery Cross Reef in the Spratly Islands.
- Kazakh President Nursultan Nazarbayev warned that the country’s stock of bad loans was growing and encouraged authorities to open criminal cases against businesses that were not repaying their debts.
- According to Saudi Arabia’s King Salman, the anti-corruption campaign that began in November 2017 has brought in $106 billion in assets to the Saudi government, close to the estimates previously put forth. His announcement is the first official confirmation of the total amount.
- Mexico’s president announced that the drug war is “over.” Whether this will mean radical changes in Mexico’s drug policy remains to be seen – the army reportedly continues to patrol the streets, which was one of his campaign promises.