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 list 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 Oct. 16

Pakistan: After members of Pakistan’s ruling party suggested banning from the military people from the Ahmadi sect – whom many mainstream Muslims consider heretical and non-Muslim – a military spokesman said that no one has to prove that they are Muslim to serve in the army and that religion is a private matter. We need to understand these moves. Is the military embracing secularism or undergoing a shift to a multi-religious institution? Does this mark a break point in Pakistani politics?

  • Finding: It does not mark a break point. Rather, this is part of an ongoing evolution of the military as it returns to its secular roots. The evolution began under the country’s last military leader, Gen. Pervez Musharraf, and has been strengthened since the country began fighting a domestic jihadist insurgency in 2009. This latest statement comes amid a political crisis involving the recently ousted prime minister, Nawaz Sharif, whose clan and key associates are embroiled in a massive corruption scandal. Sharif’s Pakistan Muslim League party, which is still in power, is using negative sentiment toward the Ahmadi minority to counter what it sees as the military’s efforts to use the judiciary to weaken the ruling party ahead of the 2018 elections.

Venezuela: The Venezuelan opposition announced that it does not recognize the results of the recent gubernatorial elections. There is a high likelihood this will lead to renewed unrest. We need to revisit the political crisis in Venezuela and make sure we understand its implications on international actors like Russia, Cuba and China.

  • Finding: The unrest has so far been limited to Bolivar state. In terms of Cuba’s involvement, Havana supports Venezuela’s security and intelligence forces; however, right now, Venezuela can offer Cuba little in exchange. Oil was the most valuable item Venezuela could offer in return, but the volume of Venezuelan oil shipments to Cuba has decreased over the past few years. As a result, Russia has increased its political and economic support of Venezuela and Cuba. Russia and China have billions of dollars’ worth of loans tied up in Venezuela through their shares in major oil and infrastructure projects and oil-for-loans deals. Russia and China have thus helped keep Nicolas Maduro’s regime afloat, but these countries face the risk of not having their loans repaid, either because the current government is unable to make the payments or because, if the current government falls, a new government would question the legitimacy of deals made by the previous one.

China: Chinese President Xi Jinping is continuing to target wealthy entrepreneurs as part of the latest phase of his power consolidation. We need to better understand if there is a pattern to who’s being targeted that may shed light on any policy changes that may come from the upcoming Party Congress.

  • Finding: Xi’s crackdowns are moving increasingly into the private sector, as evidenced by the focus on the finance sector throughout this year and by the establishment of a new oversight body that is expected to play a role similar to the anti-graft body that executed his sweeping anti-corruption campaign. The goals are to prevent competing centers of political power from emerging, to prevent wealthy oligarchs from hiding money outside the country, to rein in corporate debt and shadow lending, and to slow capital outflows.

Iraq: There is a major push to undermine Kurdish autonomy. Iraqi government forces launched an attack on Kirkuk on Oct. 15. Iran encouraged the move and supports the task force that is fighting against the Kurds. The Kurdish issue seems to be pulling Iran and Turkey together. Does this mark a shift in the Iran-Turkey alignment over the Kurds? We need to link this to Turkey’s policy in Syria as well as Ankara’s relationship with the United States. Is there a threat of a U.S.-Turkey break?

Items from Oct. 17

Russia, North Korea: Russia is sending mixed signals about its North Korea policy. In a statement published Oct. 16, President Vladimir Putin said Russia would cut ties with North Korea in accordance with a U.N. Security Council resolution passed in November 2016. But on Oct. 15, Moscow reopened a Russia-North Korea ferry route, according to RIA Novosti news agency, and trade statistics indicate that Russia was shipping fuel to North Korea as recently as June and July. Putin is to speak at a Russian think thank known as the Valdai Club, where many believe he will discuss improving U.S.-Russia relations. We have been tracking the possibility that Washington and Moscow were searching for an accommodation on Ukraine – could North Korea be the tool for this accommodation? Is Russia offering to use what influence it has in Pyongyang for concessions elsewhere, such as Ukraine? Or is this more of the same disruptive foreign policy from Moscow.

Russia: Media reports indicate that Russia’s industrial output may continue to stagnate. According to a study conducted by Gazeta.ru, consumer credit is growing faster than income; the average debt burden per capita is five times the average per capita salary. This data goes against recent indications that Russia’s economy was faring better than we expected. Is our original determination accurate?

  • Finding: There is somewhat of a paradox in the Russian economy. The country’s gross domestic product is growing, demand is recovering and consumer confidence is increasing. Yet real incomes continue to fall. Real incomes declined by 0.8 percent in August 2017 year over year. This warrants further investigation and analysis of each region.

Israel: On Oct. 16, Syrian air defenses fired on Israeli reconnaissance aircraft – the same day the Russian defense minister arrived in Israel for talks. Israel retaliated hours later by conducting an airstrike against the missile battery in question. Other reports indicate that Israeli fighter aircraft struck targets in the Sinai Peninsula too. These events are unusual. Does the minister’s arrival have any bearing on Israeli behavior? Has the Sinai attack been confirmed? How has Egypt reacted?

  • Finding: While there has been no confirmation from Israel, the Islamic State has announced that the Israel Defense Forces’ drones killed one of its Palestinian fighters in the Sinai Peninsula. Earlier, IS claimed responsibility for the rocket attack against Israel that was launched from the peninsula. This activity in Sinai, coupled with the Israeli airstrike in Syria and the Israel-Russia meetings, are emblematic of the threats that Israel faces in the region. On one hand, it must contend with Sunni and jihadist groups from Sinai and from the Gaza Strip. But the larger threat to Israel comes from Iran and its top proxy, Hezbollah, whose position seems to be strengthening in light of the Islamic State’s loss of Raqqa. The position of Iran and its allies is improving, and since Russia is closely coordinating with Iran and the Syrian regime, Israel is trying to reach out to the Kremlin in an effort to manage the threat.

Syria: The Syrian Democratic Forces announced that they have taken control of Raqqa, the former capital of the Islamic State. We expected IS to retreat, moving the core of its territory farther southeast to Deir el-Zour and to areas closer to the Iraq border. Does this assessment still hold?

  • Finding: Yes. With Raqqa lost, the Islamic State’s core territory has shifted to between Deir el-Zour and the Iraqi border. Deir el-Zour is effectively surrounded: The Syrian army has surrounded the city on both sides of the Euphrates, maintaining control as far south as al-Mayadin. Increasingly unable to defend its territory, the Islamic State is showing signs of reverting to guerilla warfare. On Oct. 8, IS used Telegram, a messaging app, to disseminate guides for guerilla warfare tactics. On Oct. 13, IS used the same platform to instruct fighters to use improvised explosive devices, a tactic used by the Islamic State’s predecessors in 2008 after they lost territory in Iraq.

Kazakhstan: Kazakhstan is facing a fuel shortage, and Russia is shipping 100,000 tons of gasoline to Kazakhstan. Yet Kazakhstan has also started exporting gas to China. We need to assess the demand for energy in Kazakhstan and how dependent Kazakhstan is on Russian fuel.

  • Finding: According to the World Bank, Kazakhstan produces enough energy to be self-sufficient. It consumes 91 billion kilowatt-hours of energy per year and produces 99 billion kilowatt-hours. But the country can’t meet its own demand and export high volumes of energy at the same time. Russian refineries currently supply a third of Kazakhstan’s energy, though the cost of Russian fuel has been increasing.

Items from Oct. 18

China: Speaking at the week-long National Congress of the Communist Party of China, President Xi Jinping emphasized China’s international standing, equitable economic development and his party’s role in government. We need to determine what kind of changes Xi plans to make. This will involve scrutinizing Chinese media reaction to the speech, analyzing the language Xi used and watching for any signs that Xi is attempting to improve China’s international standing and to address wealth inequality.

Iraq: Iraqi fighters have taken over territory in Nineveh province previously held by Kurdish forces. Meanwhile, Iran and Turkey have stationed troops along their borders with northern Iraq. The Iraqi Kurds can now be hit from three sides. We need a military analysis of the situation. What is the size of the Iraqi force and what kind of equipment does it have? To what degree does Iran control Iraqi forces? What is the status of Turkish and Iranian troop movements along the border?

  • Finding: Turkey and Iran conducted military exercises on their sides of the border with Iraqi Kurdistan around the time of the Sept. 25 independence referendum held by Iraq’s autonomous Kurdistan Regional Government. Neither Turkey nor Iran has yet amassed forces for operations inside KRG territory. Only the Iraqi armed forces and allied Shiite militias under the banner of the Popular Mobilization Forces are fighting the KRG’s peshmerga. They have retaken Kirkuk city, a military base, oil facilities and other installations and territory in Nineveh province, but peshmerga still hold territory in the northern parts of Kirkuk and Nineveh provinces. With only about 50,000 troops, the Iraqi force is insufficient to mount an assault on KRG territory, assuming that’s what Baghdad, Tehran and/or Ankara wanted. Iraqi forces get their orders from Baghdad, but because the Shiite factions that make up the central government are closely allied with Iran, the Iranians have significant influence on what they do.

Russia: Russia’s finance minister said 30 percent of the country’s budget will go toward defense and security. We need to link this item to the Kremlin’s earlier announcement that it will cut funding meant to upgrade its only aircraft carrier. How does the spending promised by the minister compare with the cuts that have been announced? How much does Russia spend on defense as a percent of its gross domestic product?

  • Finding: Russian military spending was about 5 percent of gross domestic product ($69.2 billion) in 2016, according to the Stockholm International Peace Research Institute. That was an increase of 5.9 percent compared with 2015, despite financial and economic difficulties related to the drop in energy prices. Though the Russian government proposed to increase total defense spending in 2017, preliminary data suggests the total will amount to 3.3 percent of its GDP (about $53 billion). There are some components of the military budget that have reportedly increased. These relate to funds used to pay off debts in the defense sector, create jobs and fulfill plans to modernize the military. At the same time, however, there is no evidence of new production or additional financing of military programs.

Items from Oct 19

China: The head of the People’s Bank of China said China needed to defend against a potential “Minsky moment,” a term that describes a collapse of the value of assets after a period of growth. That he would issue such a statement at all is surprising, but it is particularly notable that he did so during the National Congress of the Communist Party. Which asset class is at risk of collapse? Is it real estate or something else? The bank chief said Beijing can manage the situation. Can it?

Turkey: Turkey plans to increase military expenditures by 30 percent next year. Details on what Ankara would spend the money on are not yet available, but in any case, a better understanding of Turkey’s military needs is in order. After that we’ll be able to determine if the increase is as substantial as it sounds.

  • Finding: Details are scarce partly because of Turkey’s current state of emergency. The increase appears to be related to Turkey’s operations in Syria. More than 60 percent of Turkey’s military equipment is domestically supplied, and it plans to increase this to 70 percent in the next three years. The additional revenue will be generated through surcharges on vehicles, fuel and real estate, as well as through personal income taxes.

Russia: There are reports that in the first eight months of 2017, as much as 54 percent of new loans in Russia were used to pay off old ones. This is notable, if cryptic. How much of Russia’s population is engaged in this practice? Does the figure listed refer to total loans inside the country or to something else?

  • Findings: According to Russia’s central bank, loans provided to individuals have risen in 2017. On Oct. 1, the total amount of loans and other funds provided to individuals amounted to roughly 11 trillion rubles ($194 billion), which is 5 percent more than in January 2017. This accounted for 28 percent of all loans issued in rubles in Russia in October. The 54 percent figure indicates the percentage of loans that are taken out by individuals to repay other loans. This number includes 66.5 million borrowers, a figure that continues to grow as Russians take out new loans at lower interest rates to repay old ones with higher interest rates.