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Daily Memo: Underappreciated Threats From Iran, Overlooked Casualties in a Trade War

All the news worth knowing today.

GPF Staff |July 10, 2018

Impending U.S. sanctions on Iran continue to raise concerns over the Strait of Hormuz. An Iranian official has renewed warnings that Tehran will block the strait if Iran cannot export oil. Now, importantly, Iranian crude exports won’t stop entirely – the United States has said it would be lenient on allies like South Korea and India as they import reduced amounts of it – but we need to take Tehran’s threats seriously, considering how important oil is to its economy. The sanctions take effect Aug. 4.

The maritime shipping industry may be an overlooked casualty in the coming trade wars. Major operators of container ships are already on alert for lower demand and higher fuel prices. Germany’s Hapag-Lloyd issued a profit warning late last month, while Monaco-based GoodBulk canceled plans for its $140 million initial public offering. Maersk and Mediterranean Shipping already canceled one Pacific route and removed six ships from rotation. Many maritime freight operators are still recovering from downturns in exports in 2016, and as we monitor the countries in which tariffed goods are produced, we would do well to monitor the multinational companies that bring these goods from one side of the world to the other.

Japan has shown more interest in Central Asia. Tokyo has pledged $600,000 to fund an agriculture program for women in rural Kyrgyzstan. It is also making headway to import more textiles from and increase investment in Uzbekistan. This supports the recent statement by the Uzbek finance minister, who said his country could be the financial center of the region. Tokyo’s investment isn’t a lot of money, but any Japanese ventures, especially ones that will bring Tokyo into indirect competition with China, a major Central Asian benefactor, are too important to ignore.

Kosovo is on the offensive to settle its status with Serbia, as evidenced by several recent events. In a clear act of provocation, Kosovar police raided two Serbian villages, arresting five Serbs “for activities against the constitutional order and security of Kosovo.” The Kosovar government, meanwhile, invited members of the political opposition to join forces in negotiating a settlement with Serbia. Kosovo’s president met with Russian Prime Minister Dmitry Medvedev on the sidelines of Recep Tayyip Erdogan’s inauguration in Turkey – a notable development, given Russia’s support for the Serbian government. Serbia has barely responded, save for holding talks with U.S. and German officials. The West clearly supports Kosovo on this issue and, given all the other challenges facing the Russian government, there is little reason to believe Russia will be able to support Serbia in any confrontation.

Honorable Mentions

  • The Indian and South Korean heads of state held talks to increase trade and defense cooperation.
  • Colombians held nationwide vigils in public plazas to protest the recent killings of social activists in the country. Many are concerned that this will resurrect political violence.
  • In Beijing, Chinese President Xi Jinping is hosting the China-Arab States Cooperation Forum to increase engagement in the Middle East.
  • South Sudan’s main opposition group said no agreement has been reached in the power-sharing peace deal proposed by Uganda on July 7.
  • Police officers in Poland have gone on strike to demand better wages.