Here’s a summary of last week’s global geopolitical events that inform us on regional happenings and/or are pertinent for investing. We read a lot, but must thank our strategic partners who curate so much information and provide a deeper context. We’re always watching. Our partners have been vetted for expertise and independence. Links to their sites are at the end of the post.

Complimentary Portfolio Review

China

China held military exercises around Taiwan (“Joint Sword 2024B”) in response to comments by Lai Ching-te in his National Day speech.  What did the Taiwanese President say? Taiwan is “not subordinate” to China and Beijing “has no right to represent Taiwan.” Notably, Joint Sword 2024A followed Lai Ching-te’s inauguration Day Speech which was much more critical of the PRC. He did though repeat his commitment to “resist annexation or encroachment upon our sovereignty.” The base case is that China is an “Ambitious Dragon,” but this is a long game for China and not a near term forcible military annexation. They puffed out their chest to make a statement and that should be the end of it for now. Joint Sword 2024B

Oil down on news of declining demand from China for the 5th straight month causing OPEC do drop their forecast for global demand.

China’s GDP grew at a pace of 4.6% in Q3 – the slowest since early 2023 and below their annual target of 5%. The unemployment rate dropped to 5.1% the lowest in 3 months. Industrial output grew 5.4% the best in 5 months. And exports grew 2.4%.

  • Belt and Road Initiative

China and Pakistan met and agreed to continue to work to complete projects connected to the China-Pakistan Economic Corridor initiative. China/Pakistan

Turkey and China discussed rare earth mining cooperation. Turkey asked for China to invest in Turkey. China expertise+2nd largest reserves as demand to rise 4x

Israel

Major Headline: Israel kills Hamas Leader Yahya Sinwar, vows to continue war.

Israel’s army is conserving ammunition because of low stocks, growing bans on sales and uncertainty with the situation with Iran. Germany has no bans on sales and continues to be the main supplier of weapons; although, this may be waning under the surface, germany-slows-arms-exports-to-israel-without-admitting-it. The US, UK and Netherlands have partial bans in place. Italy, Spain, Belgium and Canada have all banned sales to Israel on humanitarian concerns. Rank raised for weapons use approval

Turkish President Recep Tayyip Erdogan told Arab League Secretary-General Ahmed Aboul Gheit that “a comprehensive arms embargo must be imposed” (on Israel) https://x.com/iletisim/status/1846571761921396790.

Turkish President Recep Tayyip Erdogan expressed concern to Russia and Iran about Israel’s “efforts to spread the war.” The primary concern here is Syria and Western support of Kurdish militia. “those who try to stir up trouble..will pay a heavy price”

Israel struck 140 Hezbollah (Iran Proxy) targets in Beirut. Israel targets Hezbollah in Beirut A drone flies toward Netanyahu home,  Weekend Escalation.

Israel tells allies that retaliation against Iran would be conventional military targets and not nuclear and oil infrastructure. Military not Nuclear/Oil targets or What’s in the best interest of Israeli national security Whatever’s Necessary

Middle East

The first trip to Egypt by an Iranian foreign minister since 2013 happened this week. Egyptian President Abdel Fattah el-Sissi asked that Iran not interfere with Israel to prevent the risk of escalation of the regional war. Must be important, it’s been over a decade

Turkish President Recep Tayyip Erdogan discussed bilateral relations and regional and global events with Nechirvan Barzani of Iraqi Kurdistan. He thanked Iraq for keeping them out of the regional conflict. The Kurdish region president also met with Turkish intelligence…Intelligence Trip?

Russia

A floor on wheat prices from the world’s largest exporter, International Price Floor.

Russia warned Israel to not even consider attacking Iranian nuclear facilities. “Warning Israel over even a hypothetical possibility”

Britain sanctions Russian “Shadow Fleet” of oil and natgas vessels. Black market boats.

80% of Russians think immigration is a problem. 62% said labor migration is damaging. Sounds Familiar

Russian Defense Minister Andrei Belousov visits Beijing. Comments coming out of the meetings with China’s Defense Ministry state that they have a common understanding of security issues in the world and their relations are great. Russian-Chinese Ties

Russia, China and Mongolia met in Islamabad to discuss strengthening ties between Russia and Mongolia. This is likely a “how can we cooperate/border/immigration/illegal immigration conversation”.

Ukraine

Kyiv has previously said that it will not renew a contract with Russian gas giant Gazprom to transport natural gas through Ukraine to Europe. Kyiv has proposed an alternative plan whereby they would be “re-exporting” gas, but not transporting it on behalf of Russia. This would require European countries (mainly Slovakia but also Hungary and Austria) to store the gas in Ukrainian infrastructure and access it as needed. The European countries would need to secure Russian assurances that they wouldn’t blow-up this storage infrastructure. You-Stor-it

Ukrainians producing drones in their kitchen. Get an edge up.

It was reported that Ukraine has supplied drones to rebels fighting Russian funded mercenaries in the western African country of Mali. Thorn in your side

North Korea

It was reported that Ukrainian Intelligence claims new battalions of North Korean citizens are joining the Russians in their war against Ukraine. Allies 1500

There were a few incidents between North and South Korea. North Korea accused South Korea of sending drones into its territory to drop anti-North Korea leaflets. Russia pledged its support for North Korea, “Unambiguous..strategic deep cooperation”

North Korea claims 1.4 million youth signed up to join the Army this week? This would be in response to claims of recent South Korean drone flights and anti-North propaganda. “The will to punish the ROK scum”

After Russia vetoed the in-house monitoring of UN sanctions against North Korea, the US, S Korea and Japan will establish a group outside of the UN. UN, Russian Veto, taking matters into our own hands

 

Middle Corridor Asia

Caught between a rock and hard place waiting for the outcome of the Russia/Ukraine War. Many of these countries are asking themselves if they should diversify away from Russia or not? Better economics are possible, but….

Kazakhstan has been asked to join the BRICS group and has presently declined. They are most certainly awaiting the outcome of Ukraine/Russian War.

The Tbilisi inland dry port, which is 60% owned by Abu Dhabi Port Group, is preparing to open later this year. It will be a trade hub to connect eastern Europe with western Asia, benefit Georgia and facilitate trade in the region.

Staying Neutral: Georgia is out on Friday’s talks between Azerbaijan, Armenia, Russia, Iran and Turkey on issues related to the South Caucasus region. We’re staying independent.

But, Britain will freeze diplomatic dialogue with Georgia until after the elections next month. The current Georgian government is pushing for a “foreign agents” bill which would require any entity receiving 20% of funding from a foreign entity to register with the government. The claim is this undermines freedom and independence.

The US DoD held talks with Armenian officials to discuss security in the region. The US gives humanitarian aid to Armenia. Armenia is taking in a lot of refugees from Nagorno-Karabakh which is a ethnic-territorial conflict with Azerbaijan. Armenia is predominantly Christian and Azerbaijan is Islamic. But the US almost certainly sees no reason to get more involved here and has voiced that publicly.

Progress has been made in India on the sale of short-range ballistic missiles to Armenia. This would help Armenia forge a strategic relationship and diversify away from Russia who is occupied and not likely timely on deliveries.

Azerbaijan’s 2025 budget includes a 25% increase in defense to counter Armenia’s “large-scale militarization policy.”

Semiconductor Wars

India wants production capabilities on their own soil. Semiconductors-India and US partner

This appears more about jobs and the local economy. TSMC-Samsung-UAE

Africa

Biden trip to Angola, Cobalt and the Green Revolution. America seeks ownership in mines

Canada

Ottawa and New Delhi continue to spat. This has to do with last June’s murder of Sikh activist, Hardeep Singh Nijjar, and claims that India continues to target Canadian citizens. Canada expelled 6 diplomats and India returned the favor. Apparently India doesn’t like critics, the US is dealing with a similar but foiled murder attempt in NYC. India’s interests in Canada

France

40 Year Flood

Cuba

Power Outages 12+ Hrs/Day

Strategic Partners

Geopolitical Futures

Peter Zeihan

 

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