RADAR SWEEP

Geopolitics Newsletter – July 11-17

SRI LANKAN PRESIDENT RESIGNED AFTER MONTHS OF PROTESTS

Sri Lankan President Gotabaya Rajajapaksa resigned on Thursday, July 14, after months of protests, which culminated in the storming of the presidential residence by protesters. Rajapaksa fled the country to Singapore, where he announced his resignation. The protests began in March, following years of economic mismanagement and a pandemic-induced decline in tourists—one of the country’s main sources of foreign exchange.

People have been queuing for hours to obtain essential items, such as fuel and medication, due to a lack of foreign exchange, resulting in an inability to import goods. Sri Lanka is highly dependent on foreign imports, including gas, fertilizer and food. After having defaulted on its international debt this year, the country is no longer capable of borrowing money and therefore has no means to spend its way out of this crisis.

While the president’s resignation caused jubilations on the streets of Colombo, the economic chaos will likely continue for at least several more months. The parliament’s scheduled election for a new president on July 20 will be a first step for the country’s economic recovery. Still, the new government will have to negotiate with the World Bank and IMF and will likely have to implement unpopular economic reforms. Read more here and here

INDO-PACIFIC GEOPOLITICS

CHINA COVID-19 POLICY – Macao shut its casinos following COVID-19 outbreak – July 11

The world’s largest gambling hub – Macao – has shut its casinos for the first time in two years, following renewed COVID-19 outbreaks. China’s unwavering commitment to its Zero-COVID policy continues to cause rolling lockdowns across the country’s economic centers which prevents it from reopening to the world. Read more [EXTERNAL]

JAPANESE POLITICS – former Prime Minister Shinzo Abe’s funeral held in Tokyo — July 12

Huge crowds paid their last respects to former PM Shinzo Abe. He was Japan’s most influential leader in modern history and remained highly influential in his party until his death. Read more

INDO-PACIFIC DIPLOMACY – Leaders met for Pacific Island Forum – July 12

Leaders of the Pacific Islanders Forum met in Suva, Fiji. The Pacific Islands have been embroiled in the larger US-China competition. With China making more assertive moves in the region, it threatens to upend the historical large ally of the islands, Australia. Read more.

CHINA DIPLOMACY – China’s Foreign Minister concluded tour to Southeast Asia – July 14

Chinese FM Wang Yi concluded his 11-day tour of several Southeast Asian countries, during which he also attended the 7th Lancang-Mekong Cooperation Meeting and the G20 Foreign Ministers Summit. The tour is part of China’s recent efforts at increasing its influence in the region. Read more

__________________________________________________

Download the Daily Brief app to stay ahead of geopolitics with daily, short, forward-looking analysis of geopolitical events before they hit the headlines.

__________________________________________________

Diplomacy

RUSSIA-UKRAINE WAR — Donetsk People’s Republic to open Moscow Embassy – July 12

The breakaway pro-Russian state in Ukraine opened an embassy in Moscow. The opening of the embassy indicates that Russia is unlikely to deviate from its long-term goals to secure the entirety of the breakaway eastern regions of Ukraine. Read more.

MENA – President Biden began his Middle East tour in Israel – July 13

President Biden began his four-day tour of the Middle East in Israel. His visit comes amidst high Israel-Palestine and Iran-Israel tensions. The tour is part of a larger effort to promote Israel-Saudi relations. Read more.

National Security

UNSC met to discuss Cyprus peacekeeping mandate – July 13

The UN Security Council decided to extend the UN’s peacekeeping mandate on the divided island. The extension comes amidst increasing encroachment into the buffer zone by both sides. Read more

US – President Biden met with the Saudi crown prince – July 15

U.S. President Joe Biden met with the Saudi Crown Prince Mohammed bin Salman to discuss strengthening ties between the two countries. President Biden also confirmed that he holds the crown prince personally accountable for the killing of Jamal Khashoggi. Read more [EXTERNAL]

Finance, Economics and Technology

Eurozone Finance Ministers discuss enlargement to Croatia – July 11

The ministers approved three laws that will allow Croatia to become the 20th member of the Eurozone and set the final exchange rate for converting Croatia’s currency to the Euro. While Croatian officials see EU membership as beneficial, citizens worry that that conversion will lead to increased price pressure during a period of already high inflation.  Read more

The Euro reached parity with the U.S. dollar for the first time in 20 years – July 12

Worries of an EU-wide recession amidst skyrocketing energy prices have pulled the currency’s value down. The European Central Bank’s slow action to raise interest rates is another reason for its depreciation against the dollar. Read more [EXTERNAL]

Sri Lanka President Gotabaya Rajapaksa resigns amid financial crisis – July 13

Rajapaksa’s stepping down ends the rule of a family that has held power for nearly 20 years. At the time of resignation, Sri Lanka is on course for 70% inflation, its foreign debt amounts to $51 billion and it is reliant on Indian foreign aid. The country is currently in talks with the IMF for a bailout deal. Read more

Society

LATAM – Argentina Liaison Table group protested fuel shortages – July 13

The Liaison Table, a group of Argentinian agricultural producers, organized a strike to protest diesel shortages and regional variations of its prices. In Argentina’s farmer-heavy north, diesel prices are double those in the capital, sparking major protest amongst machine-using farmers. The strike came amidst ongoing economic and political crisis in Argentina, highlighting frustrations with President Alberto Fernandez’s center-left government. Read more

INDIA – Dalai Lama conducted first trip post India-China border standoff – July 15

The Dalai Lama visited Ladakh in northwest India to give Buddhist teachings for the first time since a deadly Chinese-Indian military clash in 2020. Beijing opposes Indian territorial claims in the Ladakh border region and accuses the Dalai Lama of separatism. The “Tibet question,” posed by the Dalai Lama and India’s Tibetan diaspora, adds tension to the strained India-China relationship. Read more

Environment

VIETNAM – Vietnam cuts environmental taxes on fuel by half – July 11

Vietnam’s national assembly approved the tax cut as the country faces inflation pressure amid escalating global energy prices. Hanoi’s main focus is to ensure economic stability and curb inflation, though the tax cut will lead the country to fall behind on its climate commitments to reduce coal consumption. Read more

UN – ECOSOC held its High-Level Political Forum on Sustainable Development – July 12

The second session of the High-Level Political Forum on sustainable development opened to review progress and discuss further steps required. Read more

US – Senator Joe Manchin declined to back President Biden’s climate legislation – July 14

US Senator Joe Manchin told Democratic leaders that he would not support an economic package this month that encompasses new spending on climate change and tax increases on corporations and wealthy individuals. Manchin’s opposition marks a significant setback for President Biden’s climate agenda. Read more [EXTERNAL]

__________________________________________________

Download the Daily Brief app to stay ahead of geopolitics with daily, short, forward-looking analysis of geopolitical events before they hit the headlines.

__________________________________________________

OTHER

UK POLITICS – Conservative Party began the process of choosing a new leader – July 12

The UK’s Conservative Party began choosing a new party leader, following Boris Johnson’s announcement of his resignation. Read more [EXTERNAL]

THE WEEK AHEAD

DIPLOMACY – Iran, Russia and Turkey will hold trilateral meeting

Presidents of the three countries will meet in Tehran to discuss strengthening economic ties in light of sanctions on Russia. Here.

INDO-PACIFIC — Jul 20: The Sri Lankan Parliament will elect the country’s next president — July 20

Following President Gotabaya Rajapaksa’s resignation, the Sri Lankan parliament will choose a replacement to lead the country out of its current economic and political crisis. Here.

ECONOMICS –  Nordstream Gas Pipeline scheduled to restart following maintenance-related suspension — July 21

Germany and countries across the EU are waiting to see if the pipeline will resume gas delivery from Russia. Here.

DIPLOMACY – South Korean Foreign Minister Park Jin to begin three-day Japan diplomatic trip – July 18

Park’s trip may mark a historic shift in bilateral relations. Here.

ECONOMICS – MERCOSUR Summit to commence in Asuncion – July 21

The meeting will see all presidential representatives of the MERCOSUR grouping meet in Asuncion to discuss trade relations and the operation of the trade bloc. Here.

 

Contributions by: Madeline McQuillan, Keely Dion, Laurence Dynes and Shravan Krishnan Sharma