Trump and Kim to meet in February. The White House announced that U.S. President Donald Trump and North Korean leader Kim Jong Un will meet for a second time next month to discuss dismantling North Korea’s nuclear program. The news came after Trump and U.S. Secretary of State Mike Pompeo met with Pyongyang’s top nuclear negotiator in Washington. The talks are proceeding despite the fact that North Korea has not fully and verifiably dismantled its nuclear program – something we don’t expect Pyongyang to do, as we said in our 2019 forecast. Instead, the U.S. will adopt a policy of containment. Meanwhile, South Korea’s lead nuclear negotiator is headed to Sweden for talks with North Korean officials, and Pyongyang’s top representative for Russian relations is in China, presumably en route to Russia.
China makes the first move. With about six weeks left before U.S. tariffs are set to increase again, China has reportedly offered to increase imports from the United States by $1 trillion, aiming to zero out its trade surplus with the U.S. by 2024. U.S. negotiators appear to have countered by requesting regular reviews of Chinese progress on trade reforms – a measure Beijing isn’t too keen on. (The criteria, frequency and conductors of these reviews have not been specified.) As the trade war drags on, it’s putting an increasing strain on China’s economy. The China Institute for Employment Research reported that demand for export-import jobs dropped by 53 percent year on year in the third quarter of 2018 and by 40 percent in the fourth quarter. Pressure is also mounting from China’s neighbors. Countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership met today to discuss procedures for adding new members to the pact – with the lingering hope of getting the U.S. on board. If that happens, it would be another blow to China’s trade relationships in the region.
Israel and Russia in Syria. Last weekend, Israel confirmed that it conducted airstrikes against Hezbollah and Iranian targets in Syria. How Russia would respond remained the big question. Now we know. The Israel Defense Forces announced that Israeli and Russian officials had concluded talks on improving communication mechanisms and avoiding friction in operations in Syria. Details on the talks are sparse, but the IDF made a point of saying that the two sides have an understanding and will continue to coordinate with each other. Al-Quds al-Arabi newspaper, moreover, reported that Russia had asked Israel to halt airstrikes near the Damascus airport, which Moscow has plans to renovate. Nonetheless, neither Iran nor Israel has shown any sign of backing down in the aftermath of the most recent Israeli airstrikes in Syria.
The U.S. mulls stronger action against Venezuela. The U.S. has a laundry list of sanctions against Venezuelan President Nicolas Maduro’s government, but it has stopped short of directly targeting oil exports. These may no longer be off limits: S&P Global Platts said the U.S. is now considering direct sanctions on Venezuela’s oil industry. U.S. risk management analysts have said that if the U.S. is going to take tough action on Venezuela, they expect it to do so soon. Direct sanctions on the oil sector – the elephant in the room when it comes to the U.S. strategy for dealing with the Maduro government – are considered the nuclear option.
- The head of China’s Public Security Ministry called on police to “focus on guarding against color revolutions,” prioritize preventing political risk and defend political security.
- According to local Iraqi media, the U.S. is interested in establishing a military base in Anbar province. An Iraqi security source reported that a U.S. military convoy had already arrived in Fallujah, looking to set up shop on the city’s eastern side.
- Cyprus’ foreign minister announced that the U.S. will lift the arms embargo currently in place on the country. Following a meeting with U.S. lawmakers, meanwhile, the Turkish Republic of Northern Cyprus said it wanted to resolve natural gas drilling disputes with its Greek Cypriot neighbors.
- Argentina’s government recorded a fiscal deficit of 2.4 percent of gross domestic product in 2018. This figure is below the 2.7 percent target set by the International Monetary Fund, ensuring the continuation of Argentina’s standby financing program.
- Nicaragua rejected Mexico’s offer to mediate its domestic political crisis and canceled its foreign minister’s upcoming visit to Mexico City.
- OPEC announced oil production would be reduced by 1.195 million barrels per day in the first half of this year. Member states will be responsible for about two-thirds of the reduction, while states outside the cartel will account for the remainder.