Updates on Iran. After U.S. Secretary of State Mike Pompeo canceled his trip to Berlin yesterday, he made a short, unannounced visit to Baghdad (he reportedly arrived and left at night, within four hours). Signs indicate that at least one of the threats that prompted the U.S. to deploy a bomber task force and the USS Abraham Lincoln has to do with Iran’s proxies in Iraq, the Popular Mobilization Forces. Pompeo’s statement on the visit included a message on those proxies – “We’ve urged the Iraqi government for its own security to get all of those forces under Iraqi central control” – a reference to the sometimes-ambiguous chain of command, especially among the PMF forces that are directly supported by Iran. The Pentagon also made a statement to the effect that the United States’ recent deployment was in response to threats stemming from Iranian proxy forces. Yesterday, before Pompeo’s unscheduled trip, one PMF leader told Kurdish news agency Shafaq claiming that the PMF would not attack American forces unless directed to by the Iraqi government, making the point that they are under Iraqi, not Iranian, command. The reality is less clear, since, while many PMF militias are outfitted and equipped by the Iraqi government, many, many others rely substantially on Iranian support to operate. Another threat, according to anonymous U.S. officials speaking to CNN, stemmed from Iran transporting missiles on boats, although it was unclear from the reporting if the ships had missile capabilities or, if not, where the missiles were heading.
Iran has since announced that it will be suspending some of its obligations under the Joint Comprehensive Plan of Action, although the announcement was carefully worded to avoid the mention of outright withdrawal from the deal. In the announcement, Iran issued an ultimatum demanding other signatories of the JCPOA honor their commitments within 60 days, or Iran will stop observing its commitments on uranium enrichment and resume work on its Arak heavy water reactor. Iran claims that it could restart enrichment to 20 percent levels within four days of preparation.
Turkey’s drilling in the Eastern Mediterranean. Turkish Foreign Minister Mevlut Cavusoglu said Tuesday that a second Turkish drillship would be sent to the Eastern Mediterranean. Cavusoglu also dismissed efforts by Greek Cypriot authorities to have international arrest warrants issued for the crew of a drillship already in the area. On Thursday, the Cypriot president and Greek prime minister will brief European Union leaders on Turkey’s drilling activities, which are taking place within Cyprus’ exclusive economic zone. EU and U.S. officials expressed concerns over Turkey’s plans earlier this week, and on Tuesday, the Russian Embassy in Greece tweeted a call for an end to actions that could escalate the situation.
China’s reversal on trade talks. According to a report by Reuters, Beijing stepped back from many of the commitments it had previously made in trade negotiations with the U.S. In a Beijing diplomatic cable issued to Washington late Friday evening, China submitted “systemic edits” to the entire working draft of the trade agreement, according to anonymous U.S. government officials and private sector sources familiar with the talks. The reversals include commitments made by the Chinese regarding theft of U.S. intellectual property, forced technology transfers and currency manipulation. This comes after an unanticipated threat by U.S. President Donald Trump to increase tariffs on Chinese exports from 10 percent to 25 percent, but if the reports are true, then his threat could be a response to last-minute Chinese demands rather than a U.S. desire to scuttle talks.
An Argentinian stability pact. Argentine President Mauricio Macri has embarked on a campaign to get political parties and other members of civil society to sign on to his “stability pact,” ten points aimed at Argentina’s long-term economic recovery that include fiscal balance, independence of the central bank, international integration, respect for contractual law, reducing the tax burden, formal job creation, a sustainable pension system, federalism, reliable official statistics, and compliance with obligations to creditors. The government has extended invitations to the church, business, unions and opposition leaders (including former President Cristina Fernandez de Kirchner) to discuss the agreement, including implementation strategies, timelines, and tweaks based on feedback and criticism. Of particular importance is establishing some way to guarantee follow-through on the country’s International Monetary Fund loan plan and payments. Macri is up for re-election in October. His victory is not guaranteed, and the pact aims to keep the economy stable in the lead-up to the elections and to provide a level of predictability for any potential political transition.
New desalination technology. Researchers at Columbia University have developed a new desalination method that uses solvents rather than reverse osmosis or distillation. The process requires less heat, which means less energy, skirting part of the major constraint of existing desalination technologies. For countries like Iran and Israel that depend to some degree on desalination technologies for freshwater or countries whose existing freshwater resources are dwindling because of overuse, this technology could relieve political stress caused by resource management while limiting diversion of energy resources toward existing desalination methods.
- Chinese firms have defaulted on some $5.8 billion in domestic bonds since the beginning of the year, around 3.4 times more than during the same period last year and triple that of 2016, according to Bloomberg data.
- Chinese exports dropped 7 percent in April, following a 14.2 percent rise in March, according to official data. Imports, meanwhile, climbed 4 percent, following a 7.6 percent plunge in March. China’s services sector expanded at its fastest pace in 15 months, according to a Caixin survey.
- Ukraine raised the monthly military salary for servicemen on the frontline in the Donbass region by almost $200 (more than 12,000 rubles) to $640.
- Germany’s industrial output rose 0.5 percent in March, beating forecasts of a 0.5 percent drop.
- Kazakhstan increased defense spending by 16 percent in 2018, according to the Stockholm International Peace Research Initiative, and the country shows no sign of slowing down this year. From January to February, the state budget included roughly $358 million for defense spending, compared with about $210 million from January to February of 2018. Defense spending now accounts for about 7 percent of the entire budget.
- Mexican President Andres Manuel Lopez Obrador said that the Merida Initiative with the U.S. hasn’t worked and that funds going to Mexico should be redirected from military to economic development projects. He added that Mexico can fund the new National Guard on its own.
- Iranian Foreign Minister Mohammad Javad Zarif is in Moscow today meeting with his Russian counterpart Sergey Lavrov to discuss issues related to U.S. sanctions and the JCPOA.
- Crude imports from Iran to China surged in April thanks to Chinese stockpiling before the expiration of U.S. waivers on sanctions placed on Iranian oil exports on May 2.
- Venezuelan President Nicolas Maduro has assumed control of three private airports near the capital of Caracas.
- The United Nations is investigating the use of China-made arms, including missiles and drones, during a missile strike that occurred in Libya last month.
- Six Iraqi ministers are expected to lose their jobs in a cabinet reshuffle. It took five long months of negotiations to form the government last year, and the reshuffle may be indicative of ongoing competition between Iran and the U.S. in Iraq.
- Russian President Vladimir Putin has appointed a new navy commander-in-chief. Adm. Nikolai Evmenov, who will be taking the job, was previously commander of Russia’s Northern Fleet.
- Ground forces of the United Arab Emirates have arrived on the strategically located Socotra Island in Yemen, despite objections from the local mayor to the presence of any armed forces. Socotra is an ecological refuge, and locals have tried for years to limit visitation to the island.
- China’s People’s Liberation Army Navy and the Russian navy conducted live-fire exercises for the first time in the East China Sea and Yellow Sea.
- The U.S. removed sanctions on Manuel Christopher Figueroa, a Venezuelan general who has abandoned the Maduro regime and is now backing opposition leader Juan Guaido.