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

North America

• Canada has threatened retaliatory measures if the US goes ahead with a proposed tax credit for US-built electric vehicles. Canada’s Deputy Prime Minister Chrystia Freeland and International Trade Minister Mary Ng threatened to impose tariffs on American goods and suspend parts of the US-Mexico-Canada (USMCA) agreement unless US lawmakers scrap the plan. Canadian officials argue the tax proposal is equivalent to a 34% tariff on Canadian-assembled electric vehicles.
• The Covid-19 Omicron variant is spreading like wildfire in the US and now makes up about 95% of cases in the country. The US has reported record-breaking numbers of Covid-19 cases over the last several days, exceeding 1 million new cases daily, according to data from Johns Hopkins University. In response to the spread of the virus, the Biden administration plans to distribute 5 million free rapid, at-home tests and send 1,000 military health-care workers to civilian hospitals, among other measures to support states during this new wave of the pandemic. Meanwhile, the CDC has shortened quarantine recommendations as more data points to increased transmissibility during the first days of infection.
• President Joe Biden’s Build Back Better plan has stalled in the Senate due to disagreements within the Democratic party. A feature of the budget process, known as reconciliation, would allow Democrats to avoid a Republican filibuster and pass the bill with a simple majority, but it requires unanimous support from within the party. Democrats have been unable to convince Democratic Senator Joe Manchin of West Virginia to support the legislation. A failure of the Democrats to pass the bill may hurt the party in the upcoming midterm elections and strengthen the argument of Republican candidates.
• The US and Japan have pledged to collaborate on defense projects including hypersonic missiles and space-based capabilities. The agreement clearly works towards achieving US foreign policy goals to increase American presence in the Pacific and challenge China’s influence. The pledge from the US and Japan comes on the heels of the announcement that Japan and Australia will sign a defense treaty to facilitate military exercises between them.

Europe

• In Geneva this week, the US kicked off talks with Russia over Russia’s military buildup on the Ukrainian border and its security demands from the North Atlantic Treaty Organization (NATO). Moscow has amassed more than 100,000 troops on the Russia-Ukraine border and is positioned to launch a military operation as soon as this month, Western officials fear. Just a few weeks ago, Russia’s government published a list of demands for NATO countries including guarantees that Ukraine will never join NATO and that NATO will end its military activities in Ukraine, Eastern Europe, the Caucasus, and Central Asia. In talks on Monday, US officials made it clear NATO would not shut its doors and that many of Russia’s proposals were nonstarters. During the eight hours of intense discussions, Russia downplayed its threat to Ukraine saying there was no reason for an escalation in tensions with Ukraine. Talks will continue throughout the week.
• The leaders of Armenia, Azerbaijan, Georgia, Moldova, and Ukraine attended the Eastern Partnership summit in Brussels last month. At the summit, Georgia, Moldova, and Ukraine urged the European Union (EU) to let them begin negotiations on joining the bloc. While the EU has acknowledged “the European aspirations and European choice,” it has not made any affirmative action or decision on the matter. Also at the summit, the EU reaffirmed its commitment to support Ukraine should Russia take further aggressive action against it.
• Germany is criticizing an EU proposal to classify nuclear power as green energy. The German government considers nuclear power dangerous and rejects the EU’s plan to let nuclear technology be a part of its climate plan. One of its primary arguments against nuclear power is the unresolved issue of radioactive waste which can last for many  generations. Last week, Germany shut down three of its remaining 6 nuclear power plants as part of a years-long plan to phase out nuclear power. On the other hand, France aims to modernize its existing nuclear reactors and build new ones to meet its energy demands. The starkly opposing viewpoints between two of Europe’s largest economies has presented a roadblock for the European Commission.
• The Turkish lira plunged to new lows last month thanks to Turkish President Recep Tayyip Erdogan’s risky monetary policy. President Erdogan’s monetary policy approach is unorthodox in the sense that he believes higher interest rates cause inflation, rather than prevent it. Therefore, in response to rising inflation, Turkey’s central bank cut interest rates by 100 basis points. A temporary uptick in the lira – following Erdogan’s plan for reimbursing savers – did not last long. The lira has since plunged, and the annual inflation rate has surged to 19-year highs, hitting 36% in December.

Asia, Eurasia & the Pacific

• Kazakhstan has spiraled into a deadly political crisis as the government cracks down on demonstrations. Protests broke out on January 2^nd in response to a surge in fuel prices. Since then, demonstrations have snowballed into anti-government protests which have turned deadly in recent days. Authoritarian President Kassym-Jomart Tokayev has given government troops a shoot-to-kill order to control mass demonstrations. Russia and a couple of its satellite-states like Belarus has sent troops. Dozens of protesters are believed to have been killed. The US, United Nations, and European Union have urged restraint while China and Turkey have expressed their support of President Tokayev. 
• China has continued its crackdown on Hong Kong, diminishing press freedoms and destroying pro-democracy symbols. Stand News, a pro-democracy news website, was forced to shut down its operations after national security police raided its office and arrested seven people associated with the publication, including pop star Denise Ho. Also last month, officials removed the Pillar of Shame statue which commemorated the 1989 crackdown on the protests in Tiananmen Square. Its removal is yet another part of Beijing’s effort to suppress Hong Kong’s fight for democracy.
• In a virtual meeting, Chinese President Xi Jinping and Russian President Vladimir Putin affirmed the ties between their two countries. Both leaders expressed a shared “negative view” of new alliances such as the Quad partnership between the US, India, Japan, and Australia, and a new security alliance between the US, United Kingdom, and Australia. The meeting between the autocrats comes amid rising tensions particularly between Russia and the West. 
• More than 4,200 people have fled across the border to Thailand as clashes between Myanmar’s junta government and guerilla fighters from the Karen ethnic group intensify. The Karen group is one of the several ethnic minority groups fighting for greater autonomy from Myanmar’s central government. Clashes between the two sides increased after the military seized power in February 2021.

Middle East

• The UN Security Council adopted a resolution to allow humanitarian aid to reach Afghanistan. The resolution will allow aid to flow into the country for one year without violating international sanctions which aim to isolate the Taliban. Following the adoption of the UN’s resolution, the US announced its own sanctions exemptions for US and international aid groups. The World Bank has said it will transfer $280 million to UN agencies providing aid to the country. Analysts have been warning of a humanitarian disaster as more than half of Afghans are facing extreme hunger and are at risk of facing famine this winter.
• In a rare meeting with Palestinian leadership, Israeli Defense Minister Benny Gantz approved several confidence building measures. The measures included a tax payment transfer, merchant permits, and residency status for thousands of Palestinians in the West Bank and Gaza Strip. Also during the meeting, the leaders discussed security coordination between Israel and the Palestinian Authority.
• Two military bases hosting US troops in Iraq and one base in Syria were targeted in a series of attacks which began on January 3^rd, the anniversary of the US airstrike that killed top Iranian general Qassim Soleimani in Baghdad two years ago. A militia group called Qassem al-Jabarayn, likely an Iran-backed group, claimed responsibility for the attack and vowed to continue attacks until a full withdrawal of US troops. Meanwhile, also on January 3^rd, Iran published a letter calling for the United Nations (UN) General Assembly to condemn the US government’s killing of Soleimani.
• Foreign ministers from Bahrain, Kuwait, Oman, and Saudi Arabia, as well as the Gulf Cooperation Council’s (GCC) Secretary-General, traveled to Beijing this week to kick off a five-day visit. The diplomats are expected to discuss strengthening energy ties between the Gulf States and China. During the visit, officials may also “make breakthroughs” in talks over a free trade agreement between the GCC and China.

Latin America and the Caribbean 

• Mexico will end crude oil exports in 2023 as part of President Andres Manuel Lopez Obrador’s goal to reach self-sufficiency in the domestic fuels market. The state oil company, Petroleos Mexicanos or Pemex, will reduce its crude exports to 435,000 barrels per day in 2022 before completely ending them in 2023. Despite the ambitious pledge, many question the logic of getting rid of crude exports, which are a significant source of money for the country and Pemex bondholders, and many are skeptical about Pemex’s ability to refine its own crude.
• Leftist candidate Gabriel Boric Font defeated far-right candidate Jose Antonio Kast Rist in Chile’s presidential election last month. Boric won 56 percent of the votes while Kast only managed to receive 44 percent. Boric gained prominence as a leader of the student protests more than a decade ago and, in 2019 amid nationwide demonstrations, backed a constitutional rewrite that is currently underway. The 35-year-old president, Chile’s youngest in two centuries, has pledged to reduce inequality, promote a greener economy, and establish a capitalist state tuned closer to the European model. 
• Nicaraguan President Daniel Ortega was sworn in for his fourth consecutive term this week. The elections have been widely denounced as rigged in Ortega’s favor, prompting international sanctions. Both the US and EU have announced asset freezes for six people and have imposed visa restrictions for more than a hundred others who are tied to Ortega’s government. Months before the November election, Ortega and first lady Rosario Murillo directed the jailing of several opposition leaders, including potential candidates for the presidency. 
• Venezuela nearly doubled its monthly oil output in November thanks to a deal with Iran. The state-run Petroleos de Venezuela (PDVSA) was able to pump and process more extra heavy crude into exportable grades after obtaining a steady supply of diluents from Iran. This, in combination with help from small drilling firms by rolling over old debts, allowed the country to significantly ramp up its production. 

Sub-Saharan Africa

• The Economic Community of West African States (ECOWAS) will impose sanctions on Mali and cut off diplomatic relations with the country for delaying elections after a 2020 coup. Mali’s interim government has proposed holding elections in December 2025 instead of holding them this February as agreed to with ECOWAS. In response to the sanctions, Mali’s government said it will close its borders with ECOWAS members, recall its ambassadors, and reconsider its membership to the bloc. It has called the group’s actions “illegal and illegitimate.”
• As the conflict in Ethiopia rages on, the US is attempting to meditate the situation between the Ethiopian government and rebel groups. Last week, a US envoy visited Ethiopia and on Monday, US President Biden spoke with Ethiopian Prime Minister Abiy Ahmed to raise concerns about recent deadly air strikes and human rights issues in northern Ethiopia. Additional reports of human rights abuses have come in over the last few weeks, including allegations that the Ethiopian government detained or forcibly disappeared thousands of ethnic Tigrayans after they were deported from Saudi Arabia in 2020 and 2021.
• Sudanese Prime Minister Abdalla Hamdok resigned from his position after his attempts to mediate with civilian and military officials to create a new government failed. His decision comes after weeks of pro-democracy protests denouncing the military’s October coup and its subsequent deal with Hamdok. Hamdok had been deposed in the October coup and then reinstated in November. On his way out, he warned that Sudan is at a “dangerous turning point.”
• The world is paying homage to anti-apartheid leader Desmond Tutu who died at the age of 90 on December 26^th. Tutu won the Nobel Peace Prize in 1984 for his inspirational leadership during South Africa’s apartheid movement and his global human rights advocacy. South Africa entered a week of mourning following his death and leaders from around the globe paid homage to the man he was and the work he did to impact generations.

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