Progress on the trade war. The United States and China are set to hold high-level trade talks in early October. In what counts as progress at this point, China’s Commerce Ministry said both sides agreed on the need to cooperate to create the conditions for consultations. The announcement followed a phone call Thursday between Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin. On Sept. 1, the U.S. imposed 15 percent tariffs on more Chinese goods, and China imposed duties on U.S. crude oil. Washington will also on Oct. 1 increase 25 percent duties to 30 percent on $250 billion worth of Chinese imports. There’s little reason to expect any sort of imminent resolution even if the talks proceed as planned. Bottom line: The trade war has entered a phase marked by each side waiting for the other to blink.
India gets cozy with Russia. Indian Prime Minister Narendra Modi introduced a Russia dimension to bring together his Act East and Indo-Pacific strategies. Speaking at the Eastern Economic Forum in Vladivostok, Russia, Modi promised closer ties with Moscow. He announced a $1 billion line of credit to help Russia develop its Far East region, and the two countries signed a memorandum of understanding for the establishment of maritime communications between the ports of Chennai and Vladivostok. Modi said these moves complement his Act East policy, which aims to bolster relations between India and Southeast Asia. India has been gradually increasing cooperation with Japan, the U.S. and Australia. On Wednesday, for example, Modi met with Japanese Prime Minister Shinzo Abe on the sidelines of the forum, while India’s defense minister and his Japanese counterpart earlier this week announced progress in talks on a military logistics agreement and plans for expanded joint naval exercises, potentially in the South China Sea. New Delhi on Wednesday also announced plans to acquire 10 additional maritime surveillance aircraft from the U.S. Nonetheless, India has been reluctant to abandon its cherished long-time strategy of nonalignment, and Russia, moreover, remains India’s most important source of arms and military technology. This latest reaffirmation of its partnership with Russia as an Indo-Pacific partner is intended to sustain this balance.
Migration in Europe. Turkish President Recep Tayyip Erdogan threatened to “open the gates” to refugees trying to reach Europe if the international community fails to support the creation of a buffer zone in northeast Syria. From Greece’s perspective, he’s already started. Last week, 16 boats carrying about 650 migrants landed on the Greek island of Lesbos almost simultaneously, prompting Athens to summon Turkey’s ambassador. A U.N. spokesman said such an event hadn’t been seen in Greece since 2016, the same year an agreement between the European Union and Turkey led to a dramatic fall in the number of arrivals in Europe. Migrant facilities on the Greek islands are packed far beyond capacity, and the government has said it is capable of processing only about 2,400 asylum applications per month out of a backlog of 67,000. The EU is still bitterly divided over how to handle the high levels of asylum seekers, with border states demanding solidarity and a redistribution system and mostly Eastern European states rejecting burden sharing. The main area of agreement among EU members has involved better enforcement of the external borders, but in the case of the Greek islands, that is much easier said than done.
Do or die. After months of hinting, the Irish government publicly acknowledged that it would prioritize its place in the EU’s single market over an open border in the event of a no-deal Brexit. Irish Tanaiste Simon Coveney said Wednesday that the government and the European Commission would discuss where to carry out customs checks on cross-border trade. An announcement could be made on border checks – more likely “mobile checks” away from the border – and other no-deal planning as early as next week. The British government’s contingency plans state that it will not conduct checks on the northern side of the Irish border, but leaked official documents – and officials including the former head of the government’s Border Delivery Group – have acknowledged that this position cannot be sustained for long. A day earlier, Coveney briefed ministers on the government’s worse-than-expected impact assessment of a no-deal Brexit, which included projections of 10,000 job losses in the tourism and hospitality sectors within three months and “carnage” in the fishing business. No matter the cost, it’s clear that Ireland is putting its relationship with the EU first and expecting unambiguous backing from Brussels in exchange.
- Turkish President Recep Tayyip Erdogan said it was unacceptable that his country was forbidden from obtaining nuclear weapons but did not say whether Ankara had plans to develop them.
- Bank of England Governor Mark Carney said the bank now believes economic output will fall by only 5.5 percent in a worst-case Brexit scenario, not 8 percent as predicted a year ago, thanks to government preparations for a no-deal Brexit.
- Germany reported that new orders in manufacturing fell by 2.7 percent in July compared to the previous month, propelled mostly by a 6.7 percent drop in non-eurozone orders.
- The U.S. special representative for Iran reaffirmed Washington’s commitment to its “maximum pressure” campaign in an apparent rejection of France’s plan to offer a $15 billion credit line to Iran.
- A “large-scale” prisoner swap will soon take place between Russia and Ukraine, Russian President Vladimir Putin said.
- Argentine President Mauricio Macri met with Chinese Defense Minister Wei Fenghe yesterday to discuss military cooperation. Macri expressed interest in Chinese participation in building a logistics port that serves Antarctica and possible agreements between companies in the defense industry.