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Daily Memo: Words and Deeds in the South China Sea, Oil in Iraq, Power in the US

All the news worth knowing today.

GPF Staff |August 2, 2018

Watch what states in the South China Sea do, not what they say. Members of the Association of Southeast Asian Nations reached an agreement with China on a draft “code of conduct,” which lay the foundation for future talks on the disputed waters. Don’t expect much to come of this, even if a final agreement is ever struck. China’s goal is to keep everyone talking and to exploit the divisions endemic in ASEAN. There’s no reason to believe that China is prepared to make major concessions – or even that the code of conduct would be much different from the Declaration of Conduct of Parties in the South China Sea signed in 1992, which failed to alter the course of the standoff. More important is what’s happening on the ground – namely, that an agreement was struck between PetroVietnam and Japanese firms to sell natural gas from a block on the edge of China’s maritime claims. China is believed to have forced Hanoi to scrap a pair of drilling deals with European firms last year, and Vietnam has been desperate for support on the energy front. Notably, on Thursday, Vietnam held defense talks with India, which is increasingly becoming Hanoi’s most important defense partner, one that has been enhancing energy ties with Vietnam as well.

Russia, Turkey and Israel are trying to avoid a head-on collision in Syria. Russia’s envoy to Syria has reportedly assured Turkey that Russia would not participate in large-scale operations in the coming conflict in Idlib province. However, Russia’s Foreign Minister said “terrorists” in Idlib must be finished off, and Russian military leaders said Russian bases in Idlib continue to be attacked with drones by Syrian rebels. Thousands of civilians have reportedly fled the area in anticipation of a forthcoming attack by Syrian government forces, and Damascus has been clear about its intent to retake Idlib by whatever means necessary. Meanwhile, Turkish officials in the region say they are continuing to work with various opposition groups in Idlib to eliminate the remaining militants there – just not the militants Turkey controls, obviously. In the south, Russia has deployed military police to outposts on the Syria-held side of the Golan Heights. This comes after Israel killed at least seven alleged militants in an overnight airstrike. Presumably, Russia is doing this at the behest of Israel, which is reportedly unsatisfied with Iran’s withdrawal of heavy weaponry 50 miles (85 kilometers) from the border.

Iraqi crude oil is still flowing. Iraqi security forces blocked protesters from taking over an oil facility in Basra. If anyone involved in the unrest hoped to lower Iraqi output, they are in for a surprise: Crude oil exports from southern Iraq hit a record high of 3.5 million barrels per day in July.

The U.S. Congress is taking a heavier hand in shaping key U.S. policies. On Wednesday, the U.S. Senate overwhelmingly approved the annual National Defense Authorization Act. All sorts of interesting provisions were crammed into the legislation, which will affect how the White House approaches the most pressing items on its agenda. For example, the bill included a provision prohibiting the sale of F-35 fighter jets to Turkey, effectively removing one of President Donald Trump’s options for de-escalating tensions with Turkey. Another provision would force technology companies to disclose whether they permit adversaries like China and Russia to examine the inner workings of software sold to the U.S. military. Yet another would allow India to purchase Russian arms without running afoul of U.S. sanctions. The legislation is a timely reminder that in the U.S. political system power is extremely diffused. Presidents can do only so much. Congress often aligns itself with the White House, of course, most recently in new sanctions on Wednesday on Turkish officials over the continued imprisonment of an American pastor and in adding 44 Chinese entities to the Commerce Department’s export control list.

Honorable Mentions

  • Consumption in China appears to be slowing because home sales are slowing, possibly undermining China’s efforts to rely on its consumers to ride out the trade war with the U.S.
  • Iranian police used tear gas and paintball bullets to break up protests in the Shapoor district of Isfahan in central Iran.
  • Morocco’s king sacked the country’s economy minister.
  • Gulenists are reportedly fleeing Turkey en masse amid fears of a growing crackdown.
  • The volume of consumer loans in Russia in June grew twice as fast as wages.
  • France approved a contentious new asylum and immigration law.