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Watch List: May 14, 2018

Concessions in North Korea, violence in Gaza, governance in Italy

|May 14, 2018

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.

North Korea: We’re starting to get a clearer picture of what the U.S. is demanding from North Korea ahead of their summit in June. Over the weekend, Secretary of State Mike Pompeo outlined stringent conditions before the U.S. is willing to lift sanctions on Pyongyang including the transfer of nuclear scientists overseas, the destruction of nuclear data and so forth. Pompeo also said Kim Jong Un understands why his preferred phased and synchronized approach to denuclearization – the basis of past failed agreements – is unacceptable to Washington. National Security Adviser John Bolton said the North would not receive any benefits until it fully denuclearized. In exchange, the U.S. hinted at some assurances of regime security for Pyongyang while offering to help revive the North Korean economy and allow private U.S. investment. Curiously, however, Pompeo later seemed to imply that the U.S. may be content with a deal that merely prevents the North from being able to strike the U.S. mainland. Such a deal would likely decouple Northeast Asia from the U.S. alliance network, something that has been a strategic objective for China and North Korea for some time. There’s good reason to doubt that North Korea would agree to U.S. demands, hence why Pompeo appears to be keeping options open for a “lesser” deal. Either way, we need to figure out North Korea’s end game here. If the U.S. allows North Korea to keep some of its weapons while assuring only that the U.S. mainland won’t be attacked, other countries, most notably Japan, would sound the alarm. Be on the lookout for their responses.

Gaza: More than 100,000 Palestinians are expected to protest along the Gaza security fence on May 14. Israel Defense Forces have warned that hundreds are planning to break through the fence and carry out attacks on Israeli civilians. The marches are presumably meant to provoke Israel and to justify a military confrontation by Iran. As many as 52 Palestinians have already been killed, but mass casualties could put pressure on the governments of other Muslim countries that cooperate with Israel. The military consequences may be negligible, but the political consequences could be huge. Keep this on your radar.

China: China’s first domestically produced aircraft carrier left port May 13 to start sea trials. Relatedly, Chinese state media said China needs a third carrier and outlined the goal of keeping at least one carrier group deployed in the South China Sea and one in the Indian Ocean. This follows a series of reports over the past year that construction of the third has already begun. Building carriers is important, but it is only one aspect of developing the ability to project naval power. How advanced is the new carrier, and how far is China from achieving its strategic objectives in this regard?

Caucasus: There are a few things happening in this volatile region. At the behest of new Prime Minister Nikol Pashinian, Armenia’s president dismissed the head of the state security service and police. The government in Azerbaijan, meanwhile, said it is ready for large-scale military operations in Nagorno-Karabakh. The statement follows comments made by Pashinian about his country’s revolutionary fervor extending into this historically disputed area. In Georgia, thousands of protesters rallied outside parliament in response to a number of police raids in nightclubs that occurred May 11. Let’s dig into each of these issues.

Japan: Economists believe the Japanese economy contracted for the first time in two years during the first quarter of 2018, likely putting an end to the economy’s longest expansion since the 1980s. Between getting sidelined from the North Korea issue, a political scandal at home, and now a slowing economy, Japanese Prime Minister Shinzo Abe is facing pressure on multiple fronts. How bad is this really for the Japanese economy, and what does it mean for the future of Abenomics?

Indonesia: Islamic State-linked militants conducted a series of attacks over the weekend. Things have been pretty quiet on the jihadist front in Southeast Asia since the end of the Marawi siege in the Philippines. Do the attacks in Indonesia indicate a resumption of violence?

Nicaragua: Violent protests against Nicaraguan President Daniel Ortega continued over the weekend. Notably, though, the military said there was no need to act against the protesters and instead called for an end to the violence. Ortega has traditionally been close to the military. Is this still the case? Either way, we should identify who is involved in resolution talks and the status of those talks.

Italy: Italy’s anti-establishment Five Star Movement and far-right the League are expected to pick a prime minister after agreeing on a governing platform over the weekend. This would allow Italy to avoid another snap election, but it would also push the country into uncertain territory under populist rule. Both parties have proposed a referendum on Italy’s membership in the eurozone. Can they make good on their promises? How else would this government clash with the European Union?

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