At the Intersection of Geopolitics and Geoeconomics

July 11, 2023 | Volume 6, Issue 6 | The BlackSummit Team

Here is a summary of important events that unfolded over the last month, and which may affect economic, financial, and geopolitical issues in the months ahead:

North America

• US Treasury Secretary Janet Yellen visited Beijing last week in an effort to steady relations between the US and China amidst recent economic turbulence. Tensions escalated last week after China announced an export ban against the US on gallium and germanium, citing national security concerns – a move seen as a retaliation to US-implemented export restrictions and the CHIPS Act. In a press conference on Sunday, Secretary Yellen said she hoped the trip would result in a “resilient and productive channel of communication” and reiterated that “the world is big enough for both countries to thrive.” Yellen’s visit comes just a few weeks after US Secretary of State Antony Blinken visited Beijing in a long-anticipated trip to clear a diplomatic pathway.

• Indian Prime Minister Narendra Modi visited the White House on June 23rd for a discussion in which he agreed to new defense and technology cooperation with the US. In attendance was President Biden alongside a slew of tech executives, including Tim Cook of Apple, Sundar Pichai of Google, and Satya Nadella of Microsoft, among other representatives spanning multiple sectors. The discussion further accentuates a deepening partnership between the US and India, which has seen bilateral trade between the two nations double over the past decade.

•  This month, the Supreme Court shot down President Biden’s student loan forgiveness program and also overturned affirmative action programs at the University of North Carolina and Harvard, effectively ending the systemic consideration of race in admissions. The affirmative action rulings sparked controversy along party lines with Democratic leaders, including President Biden, expressing disappointment over the decision while Republican leaders have praised the Court. Regarding the student loan forgiveness, the Biden administration is seeking alternative avenues. 

Europe

• Perhaps the biggest news to come out of the Ukraine war over the last month was a staged mutiny by the Wagner group, a private military group fighting in support of Moscow in Ukraine and other parts of the world. While short-lived, the rebellion pierced Putin’s armor, exposing divisions on the front lines and in Russia’s defense ministry. Belarussian President Aleksandr Lukashenko reportedly intervened and mediated an end to the contract dispute between Wagner leader Yevgeny Prigozhin and President Putin. Russia’s Ministry of Defense set a deadline of July 1^st for Wagner fighters to either sign contracts with the Russian military, go home, or go to Belarus. However, Wagner leadership seems to be intact and, over the weekend, Putin held talks with Prigozhin and Wagner commanders. The Kremlin has promoted the meeting as an expression of Wagner’s loyalty to Putin, but the situation remains unclear.

• Kyriakos Mitsotakis’ conservative New Democratic party (ND) won 40.5% of Greece’s national vote in late June, outscoring Alexis Tsipras’ Syriza (center left) party by 23 points and putting Mitsotakis back into the premiership with a strong mandate. The result netted the New Democratic party 158 seats in Greece’s 300-member parliament, with Syriza’s second place performance collecting 47 seats. Despite a wiretapping scandal that rattled parliament last year, credit is being given to Mitsotakis for strengthening the Greek economy, as growth this year has doubled the European Union (EU) average.

•  Several days of nationwide protests and riots broke out in cities across France this month after a 17-year-old boy of Moroccan-Algerian descent was killed by police at a traffic stop. Protesters have brought scrutiny upon France’s police forces for violence and racism. Hundreds of arrests were made as police officers struggled to contain the mayhem that saw buildings damaged, cars burned, and clashes with riot police. Peaceful rallies against police violence continue throughout the country and a police officer involved in the incident is under investigation for voluntary homicide.

•  In a somewhat surprising turn of events, Turkey has agreed to allow Sweden into the North Atlantic Treaty Organization (NATO). The decision comes after months of negotiations between Turkey, Sweden, and NATO members. One of the primary sticking points for Turkey was its belief that Sweden was harboring Kurds affiliated with the Kurdistan Workers’ Party (PKK), which is considered a terrorist group within Turkey. However, in the final hours leading up to NATO’s Summit in Lithuania that began today, an agreement was reached with Turkey. The decision paves the way for a historic expansion of the defense alliance in the face of Russian aggression. 

Asia, Eurasia, & the Pacific

• Japan has restored South Korea to its list of trusted trade partners, reversing its decision to remove South Korea from the list in 2019 over a spat between the two countries concerning forced labor during Japan’s occupation of South Korea from 1910-1945. The dispute stems from a South Korean Supreme Court decision ordering Japanese firms to compensate war victims for forced labor, which escalated into tit-for-tat economic measures between the two sides. The move follows reinstatement on South Korea’s version of the trusted trade partners list – the “white list” – and will take effect July 21st, allowing a fast-track approval process for bilateral trade with South Korea once more.

• India has released its plan to subsidize companies making electric grid batteries as part of its strategy to transition towards clean energy. Subsidies would be offered from 2023 to 2030 to set up manufacturing capacity for battery cells in India. The legislation is being billed as a way to address environmental concerns at a time when expanding coal-power generation has become less desirable, while also positioning India to reduce its reliance on Chinese battery manufacturing moving forwards.

•   NATO and Japan are prepared to announce the results of negotiations on an Individually Tailored Partnership Plan (ITPP) consisting of 16 areas of cooperation. In sum, cooperation seeks to achieve three strategic goals: (1) strengthen dialogue (2) enhance interoperability and (3) bolster resilience. One area of focus will center on improving Japan’s Self-Defense Forces’ capabilities and interoperability with NATO, which includes force standardization and joint military drills. Should Japan successfully incorporate NATO standards, maintenance and repairs between Japan and NATO countries’ shipyards and aircraft hangers could take place.

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