At the Intersection of Geopolitics and Geoeconomics

November 21, 2023 | Volume 6, Issue 10 | 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

• The past month has seen a series of meetings take place between the US and China, signaling an intent to work diplomatically to resolve growing tensions between both sides. To start, at the end of October, Chinese Foreign Minister Wang Yi arrived in Washington to talk technology restrictions and US support for Taiwan, with the US side focusing on the ongoing crisis in the Middle East. In mid-November, Presidents Joe Biden and Xi Jinping met in San Francisco at the Asia-Pacific Economic Cooperation (APEC) summit to further discuss the relationship. Ultimately, progress was made on climate change, reducing fentanyl production, and the re-establishment of military-to-military communications. While Biden’s undiplomatic “dictator” remark concerning Xi proved a bump in the road, it did not derail progress made at the summit.

• Following weeks of chaos in the House and numerous rounds of voting, Representative Mike Johnson of Louisiana was elected House Speaker to replace Kevin McCarthy who was ousted in early October by some of his ultraconservative fellow party members. Meanwhile, government funding continues to be a major hurdle for Congress. Just last week, the US Senate passed a stopgap bill to fund the government, avoiding a government shutdown for the time being. The continuing resolution maintains funding at current levels and includes no policy requirements. The bill passed the House of Representatives with near-unanimous support from Democrats and about half of Republicans, with the Senate approving it 87-11. The next looming shutdown deadline will be in late January or early February.

• US President Joe Biden hosted Latin American and Caribbean countries in the first of a series of conferences for countries that are a part of the Americas Partnership for Economic Prosperity Initiative announced by Biden in Los Angeles last year. He hosted 11 countries, including Mexico, Ecuador, and Panama, and announced multiple efforts designed to bolster the economies of these countries. These initiatives range from new efforts to work with the Inter-American Development Bank to modernize digital and physical infrastructure and to support entrepreneurial activity. In addition, Biden announced initiatives designed to support supply chains in areas like clean energy, semiconductors, and medical supplies to try and cut China out of the supply chain equation.

• Mexico is facing a severe drought, with more than 75% of the nation experiencing drought conditions. The country has had 25% less rainfall than expected this year, prompting Mexico City and other areas to impose the most severe drought-induced water restrictions in history. Officials say El Niño and heat waves have caused the decline in rainfall but have also added that drought conditions have intensified over the last four years, resulting in the running down of water reservoir levels. The conditions are especially impacting Mexico’s crucial agricultural sector, threatening to increase food prices, and posing a risk to food security. 

Europe

• The Ukrainian effort to eject Russian troops from its territory has stalled as the summer offensive peters out and Russia gains the initiative around some key fortified zones, such as in Avdeevka. Adding further pressure on the Ukrainian government have been delays in the US Congress to approve additional military aid. However, during US Secretary of Defense Lloyd Austin’s visit to Kyiv this week, he announced $100 million in new military aid. German Defense Minister Boris Pistorius and European Council President Charles Michel are also in Kyiv to pledge their support. As the “rasputitsa” settles in, Ukraine’s rich soil is transforming into mud, making movement difficult until the winter freeze makes the ground solid again. As such, the conflict is expected to slow down further in the short term.

•  Socialist leader Pedro Sánchez has been reelected prime minister of Spain by securing a four-seat majority in the country’s parliament in alliance with Catalan separatist parties after he secured an amnesty deal for those involved in the 2017 secessionist bid for Catalan to leave Spain. In response to the move, the conservative Popular Party, which won the elections but failed to form a government, and its leader Alberto Núñez Feijóo, criticized the arrangement, arguing it was bad for Spain. Prior to the vote, tens of thousands of protestors gathered against the government’s formation, with some protestors booing MPs as they left parliament.

• A shocking reshuffle hit the UK’s parliament as Prime Minister Rishi Sunak named David Cameron the new foreign secretary. The move comes in a cabinet reorganization that saw Sunak sack Home Secretary Suella Braverman after Braverman released an explosive article in The Times in which she claimed that police were treating pro-Palestinian protestors more favorably than nationalists and the far-right. To replace her, James Cleverly was moved to home secretary, positioning Cameron to fill the vacant slot. The appointment has created some consternation due to a lobbying scandal in 2021, his “Remainer” views, and some foreign policy initiatives under his watch that included a state visit by Chinese President Xi Jinping.

•  The European Union (EU) announced $6.4 billion in investment in the Western Balkans to support reforms that would allow for EU enlargement into the region. Recipients will include North Macedonia, Albania, Kosovo, Serbia, Montenegro, and Bosnia and Herzegovina, with the goal of opening the EU common market in areas such as free movement of goods and services, transport, and energy. While EU membership talks have been in the works for a long time, the accession process across the Eastern European region has slowed to a crawl as lack of reforms and EU member reluctance to move forward has impeded progress.

Asia, Eurasia, & the Pacific

• Protests have racked Bangladesh over the past month in the runup to the general elections slated for early January. To start, a massive rally hosted by the Bangladesh Nationalist Party (BNP) opposition turned violent at the end of October as opposition forces called for the resignation of Prime Minister Sheikh Hasina who has been in power since 2009. These protests were followed up by garment worker protests, with demonstrators arguing that wages are too low. The protests, which Hasina blames on the BNP, were likewise shut down. With the Election Commission signaling a go-ahead for the vote scheduled on January 7, the widely held expectations are that Hasina will win a fourth term, as her approval rating sits as high as 70%.

• Myanmar’s civil war is heating up as the rebel “Three Brotherhood Alliance” — an alliance of ethnic minority groups comprised of the Myanmar National Democratic Alliance Army (MNDAA), the Ta’ang National Liberation Army (TNLA), and the Arakan Army (AA) — captured a swath of military posts in the northern Shan State on China’s border. Dubbed Operation 1027 in reference to the date, the operation is a highly visible defeat for the Junta government which risks breaking the country apart per the military-appointed president. It is unlikely that the junta government will take this lying down as it retains superior firepower overall and it remains to be seen what counter-operations the government is set to implement to attempt to rein the rebel areas back under its control.

• Chinese and Japanese commerce officials met in San Francisco at the Asia-Pacific Economic Cooperation (APEC) to discuss trade and environmental issues. Relations between the two countries have frayed as China has criticized the Japanese government’s decision to release wastewater from the Fukushima nuclear disaster into the ocean, while Japan has joined the US in cracking down on China’s ability to access advanced semiconductor technology. The two countries are deeply economically intertwined, and both had the opportunity to work together in San Francisco as the US worked to restore stability to Washington-Beijing relations. The two countries have announced that they will work towards a mechanism that encourages dialogue to reduce the harmful effects of these disputes.

• Taiwan and the UK signed a framework trade agreement this month, paving the way for future talks on clean energy, digital trade, and investment. The agreement is the first of its kind between Taiwan and a European country. Both Taipei and London have expressed the hope that it can be a model for future bilateral trade deals between Taiwan and other countries. In response to the announcement, China objected to the agreement and warned the UK to “abide by the one-China principle and stop using trade cooperation as an excuse to engage in official exchanges or enhance substantive relations with Taiwan.” In related news, the UK formally launched bilateral trade talks with South Korea this week during South Korean President Yoon Suk Yeol’s visit to the country. 

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