The Arkin Group

June 25, 2021

U.S. withdrawal from Afghanistan presents a challenging opportunity for Turkey. Today, President Biden is scheduled to meet with Afghan President Ashraf Ghani at the White House to discuss the ongoing U.S. troop withdrawal and offer continued humanitarian, diplomatic and economic assistance to Afghanistan. But regardless of the offer it will be difficult to guarantee the nation’s safety without a military foothold. Turkey, who is part of the U.S.-led NATO non-combatant military mission in Afghanistan, has stepped up and volunteered to continue providing security to Kabul’s international airport after the troop withdrawal. Ankara has also requested logistical and financial support from other allied countries and last week floated the idea that Hungary and Pakistan could help. U.S. and Afghan officials support Turkey’s offer which would help ensure greater safety for continued diplomatic missions and international efforts. Over the years, Turkey has struck a fine balance in Afghanistan and is largely respected, but the Taliban is formidable and already condemning the notion of an ongoing Turkish presence. Turkey is reportedly looking to Pakistan and Qatar to help sway the Taliban in its favor, but progress in talks held in Qatar between the Taliban and Afghan officials has been slow and getting Pakistan to cooperate will be complicated. Further, new reporting from UN Security Council asserts that the Taliban is still closely aligned with al-Qaeda, and after the withdrawal of U.S. and NATO troops there will be little to contain this alliance from reemerging.

A new Saudi-Pakistan oil deal will help Pakistan, but it will also help Saudi Arabia put a check on Iranian influence in the region. Tensions between Saudi Arabia and Pakistan had increased in recent years over issues related to Kashmir, the war in Yemen, and arms to Pakistan from Turkey. But Saudi Arabia’s agreement to restart oil aid to Pakistan is evidence that relations between Riyadh and Islamabad are improving, and it could be a strategic move to edge out Saudi’s regional rival Iran. According to Pakistani officials, the deal to restart oil aid is worth at least $1.5 billion annually and would start in July. It is not nearly as much as the previous oil credit of $3.4 billion, which was put on hold last year as relations soured, but it is considered a significant deal for Pakistan considering rising oil prices. Reportedly, Pakistan Prime Minister Imran Khan’s meeting with Saudi Crown Prince Mohammed bin Salman in May helped to facilitate the deal and has paved the way for improved relations between the two countries. The announced deal comes as Saudi Arabia appears to be shifting its diplomatic strategy in the region, including resending its ambassador to Qatar. The Saudi moves also come as Iran voted last week for hardliner Ayatollah Ebrahim Raisi to be the next president. Raisi has the backing of Iran’s supreme leader, Ayatollah Ali Khamenei, signaling Raisi’s alignment with the conservative values of the Islamic Revolution and resistance to social reforms in Iran. Raisi, who is accused of human rights abuses by the United States, said this week that he backs talks to revive the 2015 Iran Nuclear Deal, but he ruled out the possibility of meeting with U.S. President Biden. What Raisi’s election will mean for Saudi-Iranian relations going forward remains unclear. The regional rivals have not had diplomatic relations since 2016, but they began secret talks in January to discuss a range of issues, including the proxy war in Yemen. In reaction to Raisi’s election, Saudi Foreign Minister Prince Faisal bin Farhan Al Saud said they will judge him by “the reality on the ground.”

A crackdown in Nicaragua intensifies as November elections draw near. Earlier this week, Nicaragua’s National Police detained a fifth presidential candidate under charges of committing unspecified acts threatening national security. The latest action brings the total number of opposition leaders now detained up to 15. The arrests of presidential candidates, journalists, and political dissidents are an overt effort for Nicaraguan President Daniel Ortega and wife Vice President Rosario María Murillo to thwart political competition and stifle public dissent as the presidential election approaches. Ortega, who led Nicaragua as Junta leader and President from 1979-1990 and resumed office again in 2007, now seeks a fourth consecutive term. The recent detainments have drawn the ire from human rights and democracy advocates worldwide. The Organization of American States (OAS) adopted a resolution last week to condemn the crackdown and call for an immediate release of candidates and political prisoners; 27 countries supported the resolution. On Monday, Mexico and Argentina, who had abstained from the vote, recalled their ambassadors to Nicaragua for consultations in response to the continued arrests. Earlier in June the United States placed sanctions on four senior members of Ortega’s administration, including his daughter and a top army official, for being “complicit in the regime’s repression.” If mounting international pressure cannot contain Ortega’s sprawling and oppressive reach, there is little hope for free elections this November.

A 31-year veteran of the CIA with decades of experience with the Russians, TAG President Jack Devine sees ongoing Russian aggression against the United States through an intelligence prism and argues that “now is the time to engage in ‘unseen’ efforts to compel Moscow back to a contained and constrained level of behavior.” According to Jack, author of the recently released book Spymaster’s Prism: The Fight Against Russian Aggression, the United States needs to engage in “intense and consistent sub rosa negotiations on a new set of ‘Moscow Rules.’” For more, check out Jack’s latest OpEd published in The Daily Beast, “We Need Nothing Short of Moscow Rules to Wrangle Putin.”

“We Need Nothing Short of New Moscow Rules to Wrangle Putin”

June 18, 2021

Ahead of the U.S.-Russia summit, Russian President Vladimir Putin claims the Russian economy has now reached pre-pandemic levels. In an attempt to project strength ahead of his meeting with U.S. President Biden in Geneva, Putin announced the recovery of the Russian economy from the pandemic. Putin’s posturing ahead of the summit is no surprise as he seeks to elevate Russian influence on the international stage, and any numbers out of the Kremlin should be cause for skepticism. But the World Bank also recently announced that it expects Russian GDP to grow by 3.2% in 2021 and 2022 thanks to increasing vaccination rates and returning demand. These figures are in line with Russian central bank figures which estimate growth of 3-4% in 2021. The World Bank also reported that the Russian banking sector has been resilient and labor markets are improving, but not to pre-pandemic levels. Russia’s economy contracted 3% in 2020 due to Covid-19 and the drop in oil prices, the worst contraction in Russia in over a decade. Despite a recovery from the pandemic, Russia’s commodity-dependent economy has been in decline for some time due to the lack of investment, economic structural issues, and corruption. Russia’s economy has also been hit by international sanctions which have been in place since 2014 when Russia annexed Crimea. Additional sanctions have been placed on Russia since then, due to its involvement in Ukraine, interference in the U.S. elections, the use of nerve agents against Russian opposition figures, including Alexei Navalny, and most recently, for its role in the SolarWinds hack against U.S. government agencies and private sector companies. But economic concerns and sanctions seemed to take a backseat to the other matters raised at the Biden-Putin summit, including nuclear weapons, cybersecurity, the Arctic, Afghanistan, and human rights. Most issues went unresolved by the end of the short “Strategic Stability Dialogue,” but Biden and Putin did agree to send their ambassadors back to their posts in Moscow and Washington, DC. They also agreed to explore further U.S.-Russian dialogue on strategic stability and cybersecurity. The summit served as a first step to repair the spiraling U.S.-Russian relationship, but working level meetings will be the real key to any future success in easing tensions between the two nations.

For more of Jack Devine’s thoughts on Russia and the ongoing intelligence threat Russia poses to the United States, check out his recent OpEd in The Daily Beast, “We Need Nothing Short of New Moscow Rules to Wrangle Putin.”

Nigeria’s conflict with Twitter is indicative of growing socio-economic unrest. Tension between Twitter and the Nigerian government has been increasing over the past year and came to a climax earlier this month when President Muhammadu Buhari outright banned the social media giant and threatened to prosecute anyone using it. The controversy erupted when President Buhari, who has over 4 million followers on Twitter, made a tweet threatening to punish regional separatists and Twitter deleted it, deeming the message in violation of its abusive behavior policy. Since 2020 Nigeria has been dealing with increasingly challenging political and economic circumstances, including a decrease in oil output amid the Covid pandemic, rampant kidnappings by organized criminal groups, an entrenched violent Islamic extremist element, and increasing unemployment- particularly of its youth. Earlier this year, in a move likely triggering Nigeria, Twitter decided to open its first Africa base in Ghana, describing the nation as “a champion for democracy, a supporter of free speech, online freedom and the Open Internet.” According to estimates by Nigerian thinktank NOI, nearly 40 million Nigerians – mostly in the south, regularly use Twitter to express political dissent or advocate for government accountability on issues ranging from police brutality to infrastructure repair. But Twitter is also commonly used to advertise businesses and search for employment, suggesting that the ban could negatively impact the local economy. President Buhari, one of several global leaders frustrated with Twitter’s governance, might now be looking to support a nationally regulated, tax-paying social media platform as an alternative. Similar efforts worldwide have resulted in the ascent of less robust, more overtly partisan platforms. Nigeria’s ban has met with internal opposition from groups advocating for human and constitutional rights and has been condemned by the U.S. and the European Union among others. While several nations have restrictions on Twitter or have placed a temporary ban on the platform in the past, only three nations have completely banned the platform: China, Iran and North Korea.

El Salvador is the first country to pass legislation recognizing Bitcoin as legal tender, leading to questions of implementation and risk. The U.S. dollar (USD) will remain El Salvador’s official currency, but with Bitcoin (BTC) as a payment option for everything from taxes to food, President Nayib Bukele’s move welcomes cryptocurrency investment at a time when global crypto operations are in flux due to increased regulations stemming from environmental and cybercrime concerns. El Salvador has experimented with a limited, BTC-based economy with outside investors at its rural beach area El Zonte to a debatable degree of success. Details of the new legislation have been largely shared via social media, leading some to assert that Bukele is trying to divert attention from recent corruption scandals that have hurt his public image. Under the new law, the exchange rate between BTC and USD will be dictated by the market, and exchanges in BTC will not be subject to capital gains tax. Businesses without the necessary technology to transact in BTC will not be penalized for refusing the currency at present. Bukele has also touted BTC to facilitate the transfer of remittances, which account for some 20% of El Salvador’s economy. It is notable that Bukele chose to institute BTC as opposed to a national digital currency that the country could better manipulate. But details are scarce, and questions on implementation abound. It takes money to have a smartphone with enough functionality and cell service to make BTC transactions, and many of the unbanked citizens who could benefit the most from access to digital payments will likely remain without access. BTC is also volatile, and a lot of local businesses will want to exchange it for USD as quickly as possible. El Salvador has promised that the government will establish a $150 million fund so that businesses can promptly exchange BTC for USD, but the underlying exchange mechanism for these transactions is unreliable and too opaque according to many industry professionals. The fund could also be readily abused by crypto-bearing criminals looking for an easy place to cash out. In addition, the new law could impact international economic agreements. The IMF, who is currently in the middle of loan negotiations with El Salvador on a $1bn program, has already expressed concerns about the legislation, and the World Bank rejected El Salvador’s request to help with BTC implementation.

June 11, 2021

Reports indicate that two Iranian navy ships are headed to Venezuela with a transshipment of weapons in an apparent arms deal between the two countries. The U.S. government has been monitoring the movement of the ships Makran and Sahand which sailed around the Cape of Good Hope in Africa and are currently heading northwest across the Atlantic. Reportedly, the U.S. government believes the Makran is carrying fast boats in addition to a cache of weapons for sale to Venezuela. Such missile attack boats are used by Iran’s Islamic Revolutionary Guard Corps in the Persian Gulf and can be outfitted with weaponry. Iran has used these boats to provoke commercial and military boats in the past, including U.S. Navy ships in the Gulf. One of the U.S. concerns is the possibility that Venezuela would adopt a similar strategy in the Caribbean. U.S. Defense Secretary Lloyd Austin commented on the situation in Congressional testimony on June 10 about what is perceived as a provocation in the Western Hemisphere. Iranian officials have commented publicly too, saying that Tehran is not in breach of international law by trading with their ally Venezuela. The United States has sanctions on both Iran and Venezuela and has intercepted and seized transshipments of gasoline from Iranian vessels heading to Venezuela in the past year. The ships are not expected to arrive until July, and reportedly, U.S. officials will be monitoring the ships movements, including refueling at ports along the way, while also weighing options for a response. The successful transshipment of Iranian arms to Venezuela would be a significant escalation in tensions between the United States and each of these countries – potentially complicating U.S. President Biden’s negotiations for a return to the Iran Nuclear Deal.

An uptick in high-profile ransomware attacks brings the necessity of proactive cyber hygiene to the forefront. Over the past year, global cyber criminals have conducted an unprecedented number of ransomware attacks with an estimated $400 million paid out via cryptocurrency in 2020. This is attributed in-part to lax cyber security protocol in work from home arrangements and opportune targeting of industries battling Covid-19, but also due to an increase in the sophistication of the attacks themselves. The first documented ransomware attack was in 1989 but the attacks did not increase until about 15 years later when criminals started to use encryption algorithms that were tougher to crack, locking critical files in a way that could only be recovered with a private decryption key held by the attackers and sold for a ransom. Further, some attackers became more strategic, targeting industries like hospitals that depend on immediate access to their files and are more likely to pay. Cyber criminals now use more clever methods of infiltration such as spear-phishing – where an email is tailored or socially engineered for a particular recipient, increasing the likelihood of a click. The evolution of ransomware combined with society’s growing dependence on files and systems access has led to much higher profit margins for the attackers. If companies pay the ransom, most criminals unlock the files and move on to the next victim. Ransomware itself has helped spur numerous business ventures: sophisticated attackers make and sell ransomware toolkits for less tech-savvy criminals, blockchain analytics firms try to trace and recover the cryptocurrency payments, and ransomware negotiators try to lower the price of file recovery. Experts are debating if paying ransom should be illegal, but ransoms are often paid in secret and can be of an urgent nature, like the recent ransom payment by Colonial Pipeline. Regulation of the cryptocurrency industry is also actively evolving, and authorities are getting more aggressive about tracing cryptocurrency, as the recent recovery of Bitcoin from the Colonial Pipeline attack demonstrates. Perhaps most importantly though, cyber hygiene is key and can prevent cyber criminals from getting into computing systems in the first place.

Mexico’s ruling MORENA political party has lost its supermajority in Congress in the midterm elections, while Peru’s presidential runoff race remains too close to call but with socialist candidate Pedro Castillo taking a slight lead. Mexican President Andrés Manuel López Obrador’s MORENA and affiliated parties lost its qualified majority in the lower house of Congress in the June 6 elections, which were considered the largest elections in Mexican history. Preliminary results indicate that MORENA captured about 35% of the vote and lost at least 50 seats. Official results are expected next week, but it is likely that Mexico’s ruling party will have to negotiate with other smaller parties to move legislation through Congress. At the state level, MORENA took 11 of the 15 governorships. However, candidates from a new political party called Movimiento Ciudadano won the governorships in the states of Jalisco and Nuevo León. The Mexican election season saw escalated levels of political violence, but so far, candidates, parties, and the president are accepting the results. In Peru, the presidential runoff race held on Sunday, June 6 remains contested, with the right-wing candidate Keiko Fujimori, the daughter of former Peruvian President Alberto Fujimori, alleging fraud. The left-leaning, socialist candidate Pedro Castillo, a former school teacher, appears to have a slight lead with 50.2% of the vote to Fujimori’s 49.8%. Approximately 90% of the votes have been counted, and election observers have not indicated any evidence of fraud. While still too close to call, Castillo from the Peru Libre political party is closing in on the presidency. His ascendency to office reflects a growing resentment of political and economic elites in the country as Peruvians seek a new path coming out of the pandemic. It will likely mark a new chapter for Peru and a possible abandonment of market-friendly economic policies as well as a shift in the political landscape of the region.

Bangladesh’s economic prowess draws increased international attention, but internal policies remain key. Bangladesh has been making a slow and consistent economic rise, and in the 2020-21 fiscal year, reported higher GDP per capita than India. The success is largely attributed to the nation’s deliberate plan to develop and promote its garment industry, with a focus on apparel, which now employs over 4.5 million citizens and serves as a global leader in production. Second to garments, Bangladesh relies heavily on remittances, income that surprised many and continued to come in strongly over the past year despite the pandemic. Bangladesh now finds itself under close view of regional players who are trying to both learn from the success story and determine what the nation’s rise could mean for them. Just last week, Bangladesh helped Sri Lanka via a $200 billion currency swap, marking the first time that Sri Lanka borrowed from a South Asian Association for Regional Cooperation (SAARC) member other than India. International media reporting suggests that Qatar has rerouted a $5 billion investment originally destined to Pakistan for Bangladesh, and Malaysia and Japan are expected to up their ongoing investments as well. China’s also taking note, recently threatening longstanding bilateral relations would be damaged if Bangladesh cozies up with members of the Quadrilateral Security Dialogue (Quad), an informal strategic alliance involving the United States, Japan, India, and Australia. The success of Bangladesh’s garment industry is in part attributable to the integration of women in the labor force where they reportedly participate at 36% compared to India’s 20%, in addition to other social and human development indicators which are also higher. However, the nation faces potential destabilizers like political corruption, violent Islamist extremism, the impacts of climate change, and the difficult situation of the Rohingya refugees – all of which Bangladesh will have to navigate as it continues to grow economically.

June 4, 2021

As Mexicans go to the polls on June 6, Mexico’s President Andrés Manuel López Obrador is counting on his high approval rating to hold on to a supermajority in Congress. López Obrador is not on the ballot, but the outcome of these high-stakes midterm races will have a huge impact on the direction Mexico takes in the second half of his six-year term. His National Regeneration Movement (MORENA) political party is expected to capture many of the 15 governorships as well as a large swath of the seats in Congress and state legislatures. The opposition coalition is comprised of Mexico’s three traditional political parties, the PRI, PAN, and PRD, which will compete in these races as Forward for Mexico (Va por México). The PRI once held near total control of Mexican politics and still holds on to many governorships. Polling data indicates that López Obrador’s MORENA and allied parities are likely to do well, but it is unclear if they will hold on to the supermajority in Congress which López Obrador needs to push through his “Fourth Transformation” agenda. This agenda includes constitutional changes for economic reforms that would undo many of the market-friendly reforms made during previous administrations. In addition to his desire for more state control over the economy, López Obrador is also looking to consolidate power in the presidency and redistribute wealth to the poor. His populist style and confrontations with the private sector have made him a champion of the working class and helped garner him a high 63% approval rating in Mexico. But critics say he panders to the poor in an obvious power grab, while weakening the checks and balances on the presidency and undermining Mexico’s democratic institutions. Opposition candidates and the business community also criticize López Obrador for his handling of the economy, the pandemic, and violent crime. Indeed, Mexico’s economy shrank 8.5% in 2020, the country has lost approximately 228,000 lives to Covid-19, and this midterm election cycle is considered the deadliest on record with about 80 politicians killed since September. In most cases, the political violence has been perpetrated by organized crime groups and drug cartels that seek to maintain their influence with incumbents by threatening and/or killing opposition candidates. Polling data by the newspaper El Financiero found that 44% of Mexicans see insecurity as their top concern. These pressing domestic concerns for Mexico coming out of the pandemic make the midterm elections especially significant – and a clear referendum on López Obrador’s administration and the direction in which he wants to take Mexico.

In a show of unity, New Zealand and Australia make a joint declaration noting concerns about human rights abuses in China and affirm their support for an inquiry into the origins of Covid-19. On Monday, New Zealand’s Prime Minister Jacinda Ardern hosted Australian Prime Minister Scott Morrison in a face-to-face meeting resulting in a joint declaration that included concerns about Chinese actions in the South China Sea, Hong Kong, and the Uighur region of Xinjiang. The declaration comes amidst an ongoing trade war between Australia and China that ignited last spring when Australia called for an inquiry into the origins of Covid-19 and China retaliated by imposing trade barriers on a variety of Australian products. Relations became further heated last November when China shared a list of 14 grievances criticizing Australia’s prior decision to ban Huawei from rolling out the 5G network and its outspoken protest of purported Chinese human rights abuses. The conflict, which has seemingly become personal, serves as an evolving case study into what can happen when a smaller nation articulates its view against Chinese policies and China responds by weaponizing its economic influence. Last May, the Chinese levied an 80.5% tariff against Australian barley, claiming that farmers were dumping the grain in China, but widely believed to be a retaliatory measure for Australia’s support of the Covid inquiry. Australians filed a dispute at the World Trade Organization (WTO), which is still ongoing. New Zealand, whose economy is also quite dependent on exports to China, has been less overt in its stance against Beijing, likely witnessing the Australia fallout and attempting to diversify its own customer base as a defensive measure. But New Zealand has reportedly been under pressure to take a stronger stance against China’s human rights abuses, and its recent solidarity statement with Australia sends a message about its position. Already the global market has shifted as Australia and China developed new trading partners over the past year, but it remains to be seen if New Zealand, who has cultivated its own, quieter diplomatic approach with Beijing, will now suffer a similar fate as its neighbor.

WhatsApp and Twitter remain in dispute with the Indian government over implementing new national regulations on encryption and content. The intersection of tech and nation continues to challenge policymakers as the dispute continues. In February, the Modi administration issued a new set of social media regulations, set to take effect in late May, requiring that media and streaming companies appoint compliance officers and respond to takedown requests of unlawful content within 24 hours, among other requirements. The most controversial new rule touches upon an issue that has been debated by law enforcement and tech companies since the advent of popular encrypted apps: traceability. India’s latest regulations require social communications platforms to trace the “first originator” of messages if requested by authorities, defying the end-to-end encryption that users depend on for safety when communicating in regimes unfriendly to political dissent. The tech companies generally make two arguments about traceability: it violates privacy rights, and it also gives their platform a “backdoor” that anyone – not only law enforcement – can use to enter. The government, on the other hand, argues that it needs to be able to identify criminal actors or the initiator of disinformation as a matter of national security. Last week, as the new regulations were taking effect, WhatsApp filed a lawsuit in Delhi High Court alleging that the rules violate Indian users’ privacy rights and could additionally be used for mass surveillance and censorship. WhatsApp is not alone in its concerns about censorship in India. Twitter has had multiple spats with the Modi administration regarding who gets to control the narrative by removing or categorizing certain postings. India is a massive social media market for Twitter and Facebook, and WhatsApp counts its 400 million plus Indian users as its largest group. The traceability ruling is going to be significant not only for social media companies and their Indian clientele, but also to other governments as they shape their own future policy on secure messaging apps and expressive platforms.

May 28, 2021

China’s move to limit cryptocurrencies other than its own digital Yuan is a repressive move advertised as a protective measure. Last week, the Chinese Communist Party (CCP) State Council ordered a halt to cryptocurrency trading and mining within its borders, claiming that the ban would better protect its citizens from fraud and lower financial risks and speculative trading. In response to the new policy, the value of Bitcoin and Ethereum – ecosystems heavily dependent on mining activity in China – tumbled and the coins posted their largest one-day loss since the onset of the pandemic last year. But the notion that China designed its policy to reduce criminal activity in the crypto world does not add up. Illicit activity has been shown to only represent a small percentage of all Bitcoin and Ethereum transactions, and law enforcement can have visibility into a number of those transactions via financial regulations, investigative software, and legal process. Further, if the policy is designed to thwart criminal activity, regulations could have targeted privacy coins like Monero which are increasingly used for illicit transactions. With the advent of its own digital Yuan, only the Chinese government will be able to see how its citizens are earning and moving money, and they will be able to track all of it in real time. It has also been suggested that the coins might have expiration dates, allowing the government to provoke national spending during times of economic need. China’s move comes as the latest in a broader effort by the government to surveil and limit the activities of its citizens. It is also possible that China could use its omnipotent control over the coin as leverage against dealings with foreign businesses, preventing the outflow of digital Yuan to companies who protest China’s human rights, environmental, or labor abuses, as the nation is increasingly aggressive against companies who protest against its internal policies.

Anxiety over the Tokyo Olympics is growing, as a major Japanese newspaper and members of the Japanese business community call for the games to be canceled. The Tokyo Olympic games were canceled in 2020 due to the pandemic and rescheduled for July 23 to August 8, 2021, but the timing is now of concern given that the Japanese capital and other parts of the country remain under a state of emergency due to Covid-19. This week, a major newspaper in Japan, the Asahi Shimbun, called for the games to be canceled. The editorial board wrote, “We cannot think it’s rational to host the Olympics in the city this summer.” The business community is also voicing concern. For example, the CEO of SoftBank Group Corp., Masayoshi Son, warned that visitors could bring variants of the virus and a new surge of infections to Japan. In Son’s view, canceling the Olympics would bring financial losses, but going forward would be more dangerous and could lead to additional loss of life, lockdowns, and further economic damage to the country. So far, the International Olympic Committee (IOC) has said that the games will go forward and that 80% of athletes and officials will be vaccinated by then. They also point to strict protocols and restrictions on movement to ensure that the games are safe. However, according to Asahi polling data, more than 80% of the Japanese population would like the Olympics to be canceled. Meanwhile, the U.S. Department of State and Centers for Disease Control and Prevention (CDC) this week warned Americans against traveling to Japan for the summer Olympic games due to concerns for Covid-19 infections and the country’s slow vaccination rate. At this point, it seems unlikely that the games will be canceled. Canceling the games would be a major blow to Japanese Prime Minister Yoshihide Suga and IOC President Thomas Bach, who both insist that the games must go on. But the growing anxiety around the Tokyo Olympics in Japan is evidence that the global concern for Covid-19 remains high and global economic recovery will continue to be hampered by low vaccination rates and the emergence of new, more deadly variants around the world.

Mercenary issue looms large in the backdrop of a recent U.S. visit to Libya, while support by multiple state actors remains necessary for economic security. In mid-May, Acting U.S. Assistant Secretary for Near Eastern Affairs Joey Hood and Special Envoy for Libya Richard Norland visited Libya in what was reportedly the highest level diplomatic visit to Tripoli since 2014. Libya has been in a volatile position of repeated civil wars ever since longtime leader Muammar Gaddafi was captured and executed in 2011. The most recent conflict began in 2019 when East-based Libyan commander Khalifa Haftar attempted to capture Tripoli and take control over Libya’s Government of National Accord (GNA), then the leading party recognized by the United Nations. Haftar, who was supported by the UAE, Saudi Arabia, Russia, and Egypt, was ultimately taken down in late 2020 when Turkey increased its support of the GNA. Turkey supplied advanced military hardware and deployed thousands of Syrian mercenaries and additional troops. Since then, a fragile ceasefire has held, but the situation remains complicated by the number of mercenaries still on the ground. In December 2020, the UN estimated that there were at least 20,000 foreign fighters and mercenaries in Libya, including Syrians, Russians, Sudanese and Chadians. In March, the majority of opposing state actors formally recognized Libya’s newly unified interim government but they have not done much to move the mercenaries. On May 21, UN special envoy for Libya Jan Kubis warned that the continued presence of mercenaries is a threat to the entire region, adding that last month’s killing of longtime Chadian President Idriss Deby is a reminder of the link between the security situation in Libya and security and stability in the region. Getting the Russian mercenaries out of Libya will be particularly difficult, while Turkey’s ground presence is viewed with more nuance by Libya’s Government of National Unity (GNU). Relations between Turkey and Russia will no doubt impact the degree of security that the government is able to achieve moving forward and presents a diplomatic opportunity for the Biden administration in the months leading up to Libya’s December elections.

An air base under construction on Mayun/Perim Island in the Bab el-Mandeb Strait off the coast of Yemen demonstrates the island’s continued appeal, and is likely part of a larger strategic effort to counter threats from Iran-backed Houthi movement. A May 25 AP report of the recent construction of a “mysterious” air base on Mayun Island, broadly believed to be the work of the UAE, was met with a flurry of responses from Yemeni and Saudi government officials. While Emirati officials in Washington and Abu Dhabi have not taken responsibility, U.S. Senator Chris Murphy called the base “a reminder that the UAE is not actually out of Yemen.” The Saudi state news agency SPA made a statement claiming that all equipment on Mayun Island was under control of the Saudi-led Coalition Command and dismissed the notion of UAE involvement. Mayun Island, which sits at the entrance to the Red Sea in the strategic Bab el-Mandeb Strait, has a storied history of occupation and over the years multiple nations have sought control of the land for geostrategic purposes. But historic attempts to use the location have been fraught with obstacles, as the Island has no sources of fresh water, is brutally hot and dry, and the land mass itself is quite small. The UAE took control of the Island in 2015 after Gulf Arab forces swept in and successfully expelled the Houthi fighters, and the following year the Emiratis proceeded to start construction of a runway. However, the project stalled and three years later, the UAE left the Saudi-led coalition and withdrew its troops. If the UAE is behind the recent construction, it seems part of a broader Emirati strategy to amass maritime control. Last June, UAE-backed Yemeni separatists took control of Socotra, another geostrategic Island in the Gulf of Aden. The Iranian press has recently reported that the UAE brought Israeli tourists to Socotra and is possibly collaborating with the Israelis to establish intelligence bases throughout the Gulf. The Saudis have denied UAE presence or involvement strategic endeavors on Socotra.

May 21, 2021

Egyptian President Abdel Fattah al-Sisi played a significant role in brokering a ceasefire agreement between Israel and Hamas, which have been engaged in renewed violence in the last 11 days. Egypt mediated the truce to pause the fighting between the two sides starting today, after diplomats from Egypt, Qatar, and the United Nations had engaged in diplomacy between Israel and Hamas. U.S. President Biden spoke at least six times with Israel Prime Minister Benjamin Netanyahu since the fighting began early last week and with Egyptian President al-Sisi yesterday before the deal was finalized. Egypt said it would monitor the truce between the parties and would be sending delegations to Tel Aviv and the Palestinian territories. Whether or not the ceasefire between Israel and Hamas holds – and many are skeptical – the growing prominence of President al-Sisi in the region cannot be overlooked. Egypt borders Israel and the Gaza Strip and has a vested economic and security interest in seeing some resolution to the conflict, or at least a cessation of violence. But Al-Sisi also has a political interest in being at the center of negotiations in the Middle East. Egypt has played a role mediating between Israel and Hamas for many years now, having brokered a truce that ended the last Gaza war in 2014. This latest assertion of leadership is proof that President al-Sisi is positioning himself as a regional powerbroker. If the ceasefire holds, Egypt’s position of influence in the region will most certainly increase.

Brazil’s economic forecast looks to be improving, according to the Ministry of Economy, but the Covid-19 pandemic continues to pose a threat to the country and to the political fortunes of Brazilian President Jair Bolsonaro. Brazil’s GDP forecast for 2021 was raised to 3.5%, due to improvements seen in the first quarter of the year and government predictions for a return of the services sector as the national vaccination program continues. Brazil’s National Industry Confederation has also said it expected that in 2021, the country would recover the losses suffered due to the pandemic in 2020. However, the pandemic is not over in Brazil. Last year, Bolsonaro was able to make emergency cash payments to help millions of Brazilians who had lost jobs, but the government was not able to continue the stimulus payments into 2021. Bolsonaro is hoping that the economic recovery and a significant ramping up of the vaccination program will protect him from the political consequences at the ballot box next year when he is likely to face off against former Brazilian President Luiz Inácio Lula da Silva in the presidential election. Lula da Silva has been an outspoken critic of Bolsonaro and his handling of the pandemic, recently calling Bolsonaro a “psychopath” for his mismanagement of the crisis. More than 435,000 Brazilians have died from Covid-19, and while the vaccination program is gaining momentum with more supply coming online, just one in eight Brazilian adults have been fully vaccinated so far. Brazil’s variant known as P1 has hit the country hard, as well as the rest of the region where Argentina, Bolivia, Peru, Venezuela, and Uruguay have recorded surges in the virus due to the more contagious variant from Brazil. Latin America accounts for just 8% of the global population but has one third of all Covid-19 cases in the world.

Iran and Iraq are closing in on a deal to build a short railway link between Basra and the Iranian town of Shalamcheh/Shalamjah which could connect China more closely to Iraq, and Iran to Syria. According to a statement by Iraqi Prime Minister Mustafa al-Kadhimi, negotiations to build a railway between Iran and Iraq are in their final stages, and multiple agreements and memorandums of understanding have been signed with Jordan and Egypt regarding energy and transportation lines. The project, which has been in the works for several years, is estimated to cost $150m and will be funded from Iran’s Mostazafan Foundation, described as a “semi-government charity.” While the rail line itself would only run about 30km, it holds strategic value to both Iran and Iraq, and could potentially expand the reach of Basra’s port facilities. Iranian President Hassan Rouhani praised the development as a “big change” and described the connection to Iraq, Syria and the Mediterranean as “very important.” Israel and Syrian opposition parties have both expressed disapproval of the project due to fear of Iran’s increasing influence in Syria and logistical proximity to Syria’s ports. Iran has already established rail links with Turkmenistan, Pakistan and Turkey, and in December 2020 launched its first railway with Afghanistan. In addition to increasing its access to the Mediterranean, the consistent expansion of Iranian rail efforts likely signals Iran’s intent to play a major role in the regional transport of goods, countering U.S. sanctions in the process. Already, Iran has been exporting hundreds of thousands of barrels of oil to China, Syria, the United Arab Emirates, and Malaysia despite U.S. sanctions. Oil exports from Iran have steadily increased since last summer, reflecting the nation’s efforts to overcome the negative economic impacts of both sanctions and the pandemic. Such economic activity calls into question the efficacy of U.S. sanctions on Iran and ultimately, whether they are enough to constrain Iran’s strategic and nuclear ambitions.

Ethiopia’s upcoming parliamentary elections have been postponed, stoking fear of further civil unrest with implications for the region. On May 15, Ethiopia’s electoral board announced that parliamentary elections scheduled for June 5 will be delayed for at least several weeks, the second time the vote has been postponed after the initial August 2020 date was canceled due to Covid-19. Last year’s delay heightened tensions between Prime Minister Abiy Ahmed and leaders of the Tigray People’s Liberation Front (TPLF) who viewed Abiy as illegitimate and proceeded to hold a regional vote of their own, which Ethiopia deemed illegal. Since then, the political conflict has evolved into a devastating war replete with thousands of civilian deaths and atrocities like beatings and gang rape. More than 60,000 Tigrayans have fled to refugee camps in Sudan where they face increasingly challenging conditions due to flooding and malnutrition. U.S. Secretary of State Antony Blinken, who has used the term “ethnic cleansing” to describe human rights abuses carried out in the Western Tigray, recently stated that the U.S. is “gravely concerned by the increasing number of confirmed cases of military forces blocking humanitarian access” and advocating for the immediate withdrawal of Eritrean soldiers who have sided with the Ethiopian government against the Tigrayans and are reportedly preventing and stealing aid. The upcoming elections, which come at this time of logistical and security strain within Ethiopia, have been met with critical reactions; the European Union said it would not observe the vote because Ethiopia refused imported communications equipment and could not guarantee independence of its mission, while internal Ethiopian opposition parties have asserted that a national dialogue on a range of issues should come before the election. Exasperating the situation, Ethiopia and Sudan continue to have a contentious border dispute over control of al-Fashaga, an area close to the Tigray region which could be ripe territory for a proxy war between Ethiopia and Sudan should the electoral process further destabilize the nation.

May 14, 2021

Russia has denied involvement in the ransomware cyberattack on the Colonial Pipeline in the United States, which has disrupted activity and supply from the biggest U.S. gasoline pipeline. According to the FBI, the attack was conducted by a criminal network called DarkSide, which is believed to be based in Russia or Eastern Europe, prompting many to believe the Kremlin was behind the cyberattack against a critical piece of American infrastructure. U.S. President Joe Biden said on Monday that there was no evidence so far that the Russian government was involved but noted that the ransomware was from Russia. A statement from the Russian Embassy in Washington said, “We categorically reject the baseless fabrications of individual journalists and reiterate that Russia does not conduct ‘malicious’ activity in the virtual space.” The attack on the pipeline caused a shutdown which has prompted panic buying at the pumps along the East coast, particularly in the Southeast. The hackers broke into the pipeline networks on Friday, May 7, and reportedly, Colonial Pipeline paid $5 million in ransom shortly after the attack was underway. It is unclear if the Russian government was involved in this ransomware attack – a pretty typical though significant type of attack that cyber criminals have launched against a number of other American private corporations over the last several years. But it should not be discounted as a serious possibility given Russian President Vladimir Putin’s history of using cyber tactics to undermine the United States. At the very least, the shutdown of a major gasoline pipeline and the panic buying that it has caused is evidence that the U.S. energy infrastructure is vulnerable to such cyberattacks, which can have a significant impact on oil and gas in the United States.

Renewed violent clashes between Israelis and Palestinians have made it difficult for Arab states with new diplomatic relations with Israel as well as for the United States and its role in the Middle East. The renewed conflict started May 10 and so far, Hamas and Islamic Jihad have fired more than 1,000 rockets from Gaza. Some have been intercepted by Israeli antimissile defenses, but others have killed Israeli civilians, prompting a significant Israeli military offensive in Gaza. By May 12, Israelis and Palestinians were engaged in mob violence on the streets of several Israeli cities, while the Israeli military killed senior Hamas military figures. These clashes represent the latest round in the longstanding conflict in the Middle East, including a 50-day war in 2014 and several others since Hamas took control of Gaza in 2007, but the violence this week has been the worst inside Israel in decades. It is unclear how the violence will impact the political future of Israeli Prime Minister Benjamin Netanyahu, who has been blamed by opposition leaders for the spiraling situation. Meanwhile, the clashes have made it hard for Arab governments which have only just recently established diplomatic relations with Israel. The United Arab Emirates, Bahrain, Sudan, and Morocco all normalized relations with Israel last year but have criticized Israeli actions this week. The accords struck with Israel in 2020 were supposed to give the Arab world more leverage over Israel when it came to the Palestinians, but this week’s renewed violence puts this assumption in doubt and the new relations to a major test. At the same time, the situation is quickly becoming a test for the Biden administration, which may be forced to engage before having formed a coherent strategy in the region. Biden has called for de-escalation and has sent an envoy, Hady Amr, to the region. But Biden has watched several successive U.S. presidents try and fail to achieve peace in the Middle East, and at least for now, seems more eager to avoid than to engage.

Iran has enriched uranium to a higher purity than previously believed, according to the UN atomic watchdog agency. The International Atomic Energy Agency Director General Rafael Grossi reported this week that inspections from late April confirmed that Iran is enriching uranium at up to 60% purity at its Natanz plant. According to the UN agency, this was thought to be the result of “fluctuations” in the process. Iran had announced that it would seek 60% enrichment and the report now confirms this to be the case. It is also further evidence that Iran continues to violate the restrictions as laid out in the 2015 Iran Nuclear Deal, which the United States pulled out of in 2018 during the Trump administration. Diplomatic talks to bring the United States back into the agreement have only just started, with representatives in Vienna now. This new revelation about Iran’s latest violations of the deal will make American reentry into the agreement that much more difficult. So far, Iran’s government in Tehran has said it would reverse such violations if the U.S. government would remove all sanctions instituted during the Trump term. The timing of talks has been further complicated by another incident in the strait of Hormuz this week (when a U.S. coast guard ship fired 30 warning shots on Iranian fast boats speeding toward U.S. navy vessels) and Republican Senators demands that Biden call off nuclear talks with Iran over its funding of Hamas and amid ongoing clashes between Israelis and Palestinians.

May 7, 2021

India’s current Covid crisis could become a global economic crisis if the situation continues to deteriorate. India is suffering from a staggering surge of Covid-19 cases with multiple variants of the virus in circulation across the country. According to the Indian Health Ministry, the country recorded 412,262 cases of Covid-19 in a single day on May 6 – the new single-day record for India. This came just two days after the U.S. government began to restrict travel from India to the United States “in light of extraordinarily high Covid-19 caseloads and multiple variants circulating in India.” The U.S. Embassy in New Delhi urged American citizens to leave the country out of concerns for the availability of medical care. So far, the government of Prime Minister Narendra Modi has not instituted a national lockdown, despite the surge and calls from the opposition to do so. Instead, Modi has continued to support targeted, local restrictions to try to stop the spread of the virus. India’s economy suffered greatly from the severe national lockdown last year with a contraction of about 10%, but the current crisis may create economic dislocations nonetheless – not just for India, but also for the global economy. India makes up a sixth of the world’s population, is the fifth largest economy, and contributes significantly to global economic growth. A decline in Indian growth will impact the global recovery, as noted by the U.S. Chamber of Commerce which expressed concern that a contraction in India could create “a drag for the global economy.” At the same time, India produces 70% of the world’s vaccines, and the halt in vaccine exports to deal with the domestic crisis has impacted the World Health Organization’s Covax program designed to vaccinate 64 low-income countries. Without the vaccine, economic recovery in these countries also remains in doubt.

In the most recent post-Brexit complication, England and France both sent in the navy to deal with a fishing dispute off the coast of Jersey. British Prime Minister Boris Johnson announced the situation resolved May 6 after French fishing vessels departed waters they had occupied this week in protest to new fishing restrictions near Jersey, which is one of three British crown dependencies. The new trade agreement negotiated by the UK and the European Union as part of Brexit puts new limits on French fishing near Jersey and required new licenses, which were issued last week. The British deployed naval vessels in a show of strength against the French fishing boats, to which the French navy responded in kind. It was a dramatic escalation in a short period of time, complete with “act of war” headlines in the British press this week. England and France were hardly on the precipice of war over a fishing dispute in the English Channel, but it is the latest episode in the post-Brexit era. Other dramas playing out include the possibility of Scotland leaving the UK and a return to sectarian violence in Northern Ireland. The timing of the naval confrontation was not lost on observers, however, who noted that Johnson and his Conservative Party had much to gain from the public relations move just as Brits were heading to the polls in local elections across the country – the biggest set of votes since the 2019 general election, the coronavirus crisis, and negotiations for the post-Brexit trade deal with the EU.

Colombia is the latest country in Latin America to erupt in protests as the region faces increased risk of unrest coming out of the pandemic. Protests in Colombia started last week in response to President Ivan Duque’s proposed tax reforms designed to address the budget shortfall resulting from the last year of Covid-related economic declines. The protests were not just about taxes though, as Colombians of all ages took to the streets for marches and “die-ins” to express their discontent for the growing inequality and corruption in the country. In the past year, the Colombian government has taken a number of steps to increase liquidity and help those suffering from job losses due to the pandemic, but still, Colombia’s economy contracted 6.8% in 2020. The region as a whole contracted by about 7% last year. There is little doubt the pandemic has exacerbated existing problems in Latin America, including the large gap between the wealthy and poor in the region. The poor and middle class perceive the political elite to be corrupt, manipulating the system against them, and hampering their social mobility. Joblessness resulting from Covid-19 and the economic dislocations of the past year have thus increased this sense of helplessness and lost opportunity for many Latin Americans, who do not have access to the vaccine and have also lost loved ones to the virus in this past year. But protests in Latin America are not new, and in many ways, the protests in Colombia are similar to protests the region in 2019 in Chile, Bolivia, Nicaragua, and Peru. The country may be different, but grievances are largely the same.

April 30, 2021

Russian authorities have suspended the activities of jailed opposition leader Alexey Navalny’s political organization the Anti-Corruption Foundation and is expected to label it extremist. This would put the organization in the same legal category as Al Qaeda and could portend prison sentences for its supporters. Many of Navalny’s aides and staff have already been arrested, and Navalny himself is facing another two years and six months of his own sentence in a notoriously harsh penal colony northeast of Moscow. Authorities have not made evidence in the case public, claiming that it includes “state secrets”. However, the steadily intensifying crackdown on Navalny and his supporters, triggered in part by a strong show of opposition to Kremlin actions targeting Navalny – both at home and abroad – reads as the product of political weakness and fear. Navalny’s supporters number in the thousands, at least, making the likelihood of the state making good on its threat to jail them all seem dubious at best. Recent constitutional changes put Vladimir Putin on track to remain president until 2036, having been initially elected in 2000 (with a hiatus from 2008-2012 while he was Prime Minister). Decades-long rule by the same strongman has been a feature of many post-Soviet states, as have worsening inequality and political repression, and growing discontent – all of which are visible in Russia now. Furthermore, Putin’s aspirations of a Russian return to great power status, and the associated extraterritorial adventurism (invasion, poisonings, spying, election interference, blowing up weapons depots), have led to growing international backlash, including a steady tightening of sanctions on some of the country’s wealthiest and most influential individuals. Strong man rule is not always toppled by popular opposition, and in any case, the opposition does not appear to be strong or organized enough to unseat the current denizens of the Kremlin. But the popular support Putin enjoys at home is looking increasingly shaky, western powers are hardening their positions against his aggressive actions, and opposition movements like Navalny’s are finding increasing purchase among ordinary Russians.

Turkish President Recep Tayyip Erdogan has demanded that U.S. President Biden reverse a decision to recognize the Ottoman killing of as many as 1.5 million Armenians in World War I “genocide”. The first U.S. president to do so was Ronald Reagan called it genocide in a 1981 statement on the Holocaust, but this did not constitute a formal recognition. Biden’s decision reflects both his administration’s focus on human rights as a core policy issue and a recalibration of the U.S. relationship with Turkey, which has suffered in recent years for variety of reasons. These include Turkey’s decision to disregard NATO objections and purchase Russian missiles (though Turkey is a NATO member) and the U.S. imposition of sanctions on Turkey’s state-owned Halkbank for violation of sanctions on Iran. Thus far, Erdogan has not followed up on his demands for a reversal with threats of concrete retaliatory action. Rather, Turkey appears to be mindful that the bilateral trade relationship with the U.S. can be a powerful tool to help reverse some of the more severe economic impacts of the Covid-19 pandemic. There is some concern, however, that retaliation against the designation could target Armenia directly, especially considering Turkey’s alleged involvement on behalf of Armenian neighbor Azerbaijan when fighting broke out between the two countries in late 2020 over the status of contested enclave Nagorno-Karabakh. However, this latest move by the Biden administration seems to indicate that it is prepared to be more confrontational with Turkey on select issues. However, this won’t sit well with Erdogan, whose aggressive actions – in any theater – would likely further complicate our relationship with Turkey and hinder Erdogan’s efforts to get Turkey’s economy back on track.

Venezuela’s President Nicolás Maduro has agreed to receive humanitarian aid from UN organizations. For months, Maduro has rejected humanitarian aid from several global aid agencies offering to help the Venezuelan people, seeing the offers as an affront to Venezuelan sovereignty and an example of American “imperialism” aimed at destabilizing his government. However, with the economic crisis in Venezuela now much worse as a result of the Covid-19 pandemic and U.S. sanctions on the oil sector, Maduro has agreed to allow for the UN World Food Program to provide school lunches for approximately 1.5 million Venezuelan children. The Maduro regime has also brokered an agreement for Venezuela to receive vaccines through the UN program known as COVAX. But the $64 million payment to COVAX was made possible only because opposition leader Juan Guaidó, who the United States and over 50 other countries have recognized as the legitimate interim leader of the country since 2019, requested the release of a portion of Venezuela’s frozen funds for this purpose. Prior to the agreement, Maduro had been seeking vaccines from Russia and China. While it is welcome news, some observers see Maduro as posturing with the UN in an attempt to regain international legitimacy as well as some lost popular support at home, particularly in a time when there are reports of growing lawlessness along the borders and a lack of state presence in the Venezuelan hinterlands.