What follows are the preliminary findings for issues identified in the daily Watch Lists this week. We are only sending findings that we regard as significant or potentially significant to keep this email manageable. We have findings for all the Watch List items. Should you be interested in findings not listed here, please contact us and we will email them to you.
To emphasize, you can contact us if there is an item not included here for which you’d like to see the findings.
Our goal, as always, is to focus on what matters and not on things that don’t.
Items from Jan. 19
Russia-Mali: Russian President Vladimir Putin confirmed Moscow is ready to offer assistance to Mali in fighting extremist groups. Russia has not been involved extensively in African counterterror operations. Mali historically has been assisted by France in these matters, though French security forces are overextended. We need to find any available details on what Russia offered and determine if the Malian and French governments have responded.
- Finding: Russia and Mali have been discussing counterterrorism support from Russia since September 2016. In October 2016, Russian Deputy Foreign Minister Mikhail Bogdanov also expressed Moscow’s willingness to help Mali address security threats. This year, Russia is supposed to deliver Mi-8/17 transport and Mi-24/35 attack helicopters to Mali. Mali army officials also expressed interest in purchasing more infantry weapons like tanks. Putin’s comments were part of his condolences offered after an attack on a military base in Gao, Mali. He did not detail any action items or what equipment would be offered.
Kazakhstan: About 400 Kazakh oil workers have started a hunger strike to protest a union confederation’s closing. There are also reports of the Kazakh government planning to regulate commenting on social media and the internet. Our forecast anticipates growing unrest in Central Asia. Let’s figure out why the union body closed and get an update on where our forecast stands.
- Finding: Both the hunger strike and Kazakh authorities moving to regulate discussions on social media and the internet suggest that the government is worried about public mobilization. The confederation was closed due to bureaucratic barriers. Other recent labor strikes in Kazakhstan were over pay, benefits and workers’ rights. They were larger in number but did not involve hunger strikes.
Items from Jan. 18
China: Housing prices in China have fallen for the first time in nearly two years after several city governments passed restrictions on home purchases and increased the minimum down payment required for a mortgage. It’s time to look at how these changes in the housing market will impact the Chinese economy.
- Finding: The real estate market represents 15-22 percent of GDP when accounting for construction, sales and outfitting of homes. A fall in real estate prices and activity will strongly impact construction workers, including many from the interior who find work in urban areas. The Chinese government needs to avoid a rise in unemployment, especially among those from rural interior areas. This is a major issue we will continue to track.
Ethiopia: The United Nations Food and Agriculture Organization has warned that if an ongoing drought in Ethiopia continues, it could jeopardize recovery efforts. Historically, droughts have contributed to major government changes. Given that tensions among ethnic groups already are high, let’s measure the scale of this drought and its threat level compared to previous ones.
- Finding: Prolonged periods of drought corresponded with the fall of several regimes in Ethiopian history, including the Derg and Emperor Haile Selassie. This is a new drought that largely affects southern regions. Prior to this, another severe drought ended in the summer of 2016. That drought affected the northern parts of Ethiopia – the Tigray, Somali and Afar regions. The Ethiopian government already has asked the U.N. for over $900 million in aid.
Bosnia-Herzegovina: The United States has imposed sanctions on Republika Srpska President Milorad Dodik for “actively obstructing” the Dayton Accords. Let’s identify what interests the U.S. has in the region that could explain these sanctions.
- Finding: The U.S. Department of the Treasury’s Office of Foreign Assets Control imposed on Jan. 17 sanctions against Dodik for obstructing the 1995 Dayton Accords’ implementation and posing a significant threat to Bosnia-Herzegovina’s sovereignty and territorial integrity. According to Serbian media reports, he applied for a U.S. visa several times in December and has attempted to get an invitation to President Donald Trump’s inauguration but was denied on both. The U.S. has backed and is committed to the Dayton Accords, which call for cooperation between Bosniaks, Serbs and Croats in governing the Federation of Bosnia and Herzegovina. Considering Dodik has taken steps to hold a referendum on independence for Republika Srpska, the move against Dodik is not out of the ordinary.
Items from Jan. 17
China: China’s Ministry of Civil Affairs may start randomly inspecting nongovernmental organizations. At least 3 percent of all registered organizations would see their information disclosure, management and finances inspected. Let’s keep an eye on this. We are interested in signs of President Xi Jinping consolidating power and what type of groups he is targeting.
- Finding: This topic has emerged now because the legislation governing foreign nongovernmental organizations (NGOs) in China came into effect on Jan. 1. The significant development is that it now appears the Public Security Ministry will be taking a more active role in enforcing this legislation. At the end of October 2016, it was reported that the ministry was the authority responsible for writing the guidelines and parameters for the enforcement of the NGO legislation. Shortly thereafter, the Civil Affairs Ministry’s top two officials were removed from their posts for suspected severe violations of Communist Party discipline. Xi has managed to consolidate his power over the Civil Affairs Ministry and will use the Public Security Ministry to more strictly regulate and monitor NGO activity in the country.
Russia-Afghanistan: Reports indicate Russia might be supplying the Taliban with more sophisticated weaponry. Two officials from Afghanistan’s Farah province said Taliban in the area have received night-vision devices, access to 82mm mortars and Russian-made ground rockets. We expect growing instability in Central Asia, which will directly affect Russian interests. We need to look for other anecdotal reports to help build out this picture.
- Finding: See our Reality Check from Jan. 18.
Items from Jan. 16
Philippines: The Philippine foreign minister says the country has filed a diplomatic protest against Chinese activities in South China Sea. Last month, the same official said the Philippines would not take this step. All politicians lie, but this is a rather bold-faced one. Let’s determine if a shift is occurring here.
- Finding: The Philippines wants to ease its dependence on the United States and pursue a foreign policy as independently as possible. Given it is stuck between the U.S. and China, the government has adopted the strategy of playing the two powers off one another to get concessions. For more details, read our latest Deep Dive.
Syria: The Islamic State claims it has cut off the only supply route to Deir al-Zour’s military airport as part of an offensive targeting Syrian forces around the eastern city. Let’s independently confirm this and identify potential consequences for Syria’s military.
- Finding: IS has indeed cut off the supply route in an effort to besiege the military airport in Deir al-Zour. It controls some hills north of the airport and is using rocket launchers to repel any potential reinforcements. IS also took control of multiple neighborhoods and a large cemetery. The airport is used by the Syrian military to carry out airstrikes in eastern Syria and the cemetery served as a Syrian army base. Fighting is ongoing.
Russia: Russia’s Finance Ministry says it is finalizing a new position for the oil industry’s tax system. Let’s see what new developments transpire and obtain details about the taxation system, as well as reaction from Russian companies.
- Finding: It has been reported that the current taxation system affecting the oil industry will be maintained throughout 2017 and modifications will be introduced in 2018. Indirect taxes on the energy industry will be increased, as will most export duties starting Feb. 1, 2017. The export duty on oil will reach $89.50 per ton from $79.10 per ton. The duty on high-viscosity oil will rise to $13.90 per ton from $12 per ton. The duty will total $26.80 per ton for light oil products and oils and $89.50 per ton for dark. The duty will rise to $26.80 per ton for commercial gasoline exports and $49.50 per ton for straight-run gasoline, up from $43.50 per ton. The duty on liquefied natural gas remains at zero, and the duty on coke will rise to $5.80 per ton from $5.10 per ton. As all producers export some of their products, this will increase their costs.