The items listed below represent potential emerging issues that our analysts are tracking. These can be long term or short term, but will be updated daily. If an item on our Watch List becomes critical, we will email you a full analysis explaining its significance.
Each Saturday, we will follow up our daily Watch List for each week with our conclusions on these issues.
Canada, China, Hong Kong: The Bank for International Settlements, which has made accurate predictions in the past, published some ominous analyses in its quarterly review. BIS “Early Warning Indicators” identify a few countries that look particularly vulnerable to a banking crisis right now. At the top of the list are Canada, China and Hong Kong. The report also called attention to negative credit conditions in Turkey, Russia and Switzerland. Let’s evaluate the chances that we may be close to crisis in some of these countries.
U.K., Russia: Relations between the U.K. and Russia are in flux after an attack involving a nerve agent on a Russian former double agent and his daughter. Britain’s National Security Council is meeting, and British media reports suggest the country will announce retaliatory measures against Russia, potentially including diplomatic expulsions and sanctions. French daily Le Figaro noted that the U.K. may reach out to Germany and France to get support for the sanctions, which takes this from a bilateral spat to something more. Our forecast says Russia is trying to rejoin Europe, not cause problems, and we’ve seen Germany – at least internally – being a little more ambivalent about taking a hard line on Russia. Is the U.K. going to try to get EU support for its response, and will it find it, especially in the context of Brexit?
Turkey: Turkish President Recep Tayyip Erdogan criticized NATO for “not supporting” Turkey in its operations in Afrin, Syria. Meanwhile, Asharq Al-Awsat, a London-based Saudi daily that is becoming increasingly unreliable, reported that Turkey and Russia had come to a deal over Afrin’s fate. Is Erdogan trying to set things up for Turkey to leave NATO? What about this deal with Russia – is it real or just Saudi paranoia? Is it a data point showing that Turkey is moving away from NATO?
Poland: Polish newspaper Rzeczpospolita has a report quoting a Polish academic who says U.S.-Polish relations have reached something of a crisis point. This is just one academic being cited in one article, albeit in a pretty well-respected newspaper, but it is diametrically opposed to our understanding of where U.S.-Polish relations stand. We need to re-examine the state of relations between the two countries to be sure we aren’t missing something.
China: The Hong Kong-based South China Morning Post reported that China is going to introduce “significant changes” to its foreign affairs bureaucracy. Plenty of reforms and reshuffles are coming out of the National People’s Congress and other meetings, but this one matters because it may change the way China conducts its foreign policy. It may even suggest a change in that foreign policy, depending on what the restructuring is and who gains power as a result. Find out what reforms are being considered and what they mean for Chinese foreign policy. Basically every reform like this in China forces us to ask whether this is Xi Jinping consolidating power or responding to a challenge to his power, so let’s evaluate it from that perspective as well.
Japan: Japan’s Finance Ministry confessed that it altered records of a state-owned land sale. This is mostly inside baseball and only matters if it implicates Prime Minister Shinzo Abe in a way that undermines his credibility. Let’s keep an eye on polls and whether Abe comes under fire for this.
Mongolia, Kazakhstan: The Mongolian and Indian defense ministers are meeting at India’s invitation. Meanwhile, a representative of Japan’s Defense Ministry is in Kazakhstan meeting with an official. Mongolia is important from China’s perspective, and Beijing won’t take kindly to Indian involvement. It’s also neutral ground between China and Russia. As for Japan, that fits our forecast of China-Japan competition emerging in the region. How important are these visits? Keep an eye out for China’s reaction, if there is one.
Israel, Iraq: We have two Islamic State-related items. First, an Israeli brigade commander on the Egyptian border said that the Islamic State’s capabilities and tactics are improving rapidly in Sinai and that Israel Defense Forces are preparing to act against the threat on Israel’s southern border. Second, IS continues to mount attacks in Iraq. Most of the attacks haven’t done much damage, except for recently deadly attacks in Mosul and Salahuddin. This could indicate that IS remnants in Iraq are increasing their capabilities and reach. Let’s evaluate the Israeli commander’s claims, including whether there are indications that Israel is preparing for action. Is there anything to suggest IS activity in Iraq is becoming more sophisticated?
Saudi Arabia: Saudi Press Agency announced that a new department has been created to address corruption cases in the kingdom. The department will reportedly be under the authority of the Saudi public prosecutor, which marks a change from who is handling corruption cases. Was this a response to resistance to the reforms? We’re alert for anything related to the Saudi purges, and we haven’t seen the reaction we would have expected from Crown Prince Mohammed bin Salman.
Iraq, Russia: A Russian presidential aide said Russia is delivering a brigade’s worth of armored hardware to Iraq. This comes after Iraq’s prime minister issued a decree formalizing the inclusion of Shiite groups in the Iraqi security forces. This seems like a lot of equipment. Could it be further evidence of Russia and Iran taking over Iraq? How will the U.S. respond?
U.S., Oman: The U.S. defense secretary is in Oman for a visit set to last several days. Find out what the U.S. has to talk about with Oman.