The Arkin Group

October 29, 2021

US Senators urge President Biden not to sanction India on Russian weapons purchase, implications for global Russian defense deals and China. In 2018, India committed to buy five units of the Russian S-400 surface-to-air defense missile systems and the first batch is scheduled to arrive this year. Delhi aims to ramp-up defenses against Pakistan and China, particularly given the ascent of the Taliban and ongoing border disputes, but the S-400 purchase subjects India to sanctions under the US Countering America’s Adversaries Through Sanctions Act (CAATSA) which prohibits engagement with Russian defense or intelligence sectors. In 2020, Washington sanctioned Turkey under CAATSA for purchasing the S-400 system, but some US senators are arguing there is now a “national security imperative” for waiving sanctions on India. Security challenges from Pakistan and China are simmering on India’s borders, and this week Beijing issued the Land Border Law, which takes effect Jan 1, detailing how China guards its land borders and emphasizing that the nation is willing to fight for territorial integrity it deems “sacred and inviolable.” India has one of the few remaining unsettled boundaries with China, and the law sends a strong signal that Beijing isn’t going to hesitate to use force.

As COP26 approaches, green and sustainable bonds continue to gain traction. The 26th United Nations Conference of the Parties Climate Change Conference (COP26) begins in Glasgow this weekend, with companies, nations, and investors all making pledges and commitments to curb global warming. As part of this initiative, Qatar Energy, a top global liquefied natural gas (LNG) supplier, is reportedly on track to become the first national oil company in the Gulf to sell green bonds as part of its sustainability initiative. According to a recent report by Moody’s ESG Solutions, green, social, sustainability, and sustainability-linked bond issuance will reach a global combined $1 trillion in 2021, nearly doubling from 2020. Green bonds, which have been around for over a decade, are typically used to finance projects pertaining to environmental issues like renewable energy, while social bonds tackle issues like education and healthcare. Sustainability bonds speak to both causes and became especially relevant during Covid-19 which brought social financing to the forefront at the same time climate pressures have increased.

Upcoming local elections in South Africa could challenge leading party. After a summer marked by political infighting, social unrest, looting, and a lapse in the provision of basic services, on Monday South Africa will hold local elections. Voters will be looking for candidates to get the economy back on track and resolve the negative impacts of Covid-19, especially given the continued rolling blackouts and high national unemployment rate over 30%. However, analysts have cautioned that voters are being fed misinformation by campaigners and could be voting to sway national issues that wouldn’t be changed in a local election. Religion has also been newly used as a campaigning tool, with some parties advocating for a return of religious education. Media reports indicate that many younger voters are apathetic and disillusioned with both the ruling African National Congress (ANC) and the broader political apparatus. Nonetheless, local elections tend to be a good gauge for general elections in South Africa, and it will be telling to see how the ANC, who’s won every general election since 1994, will fare given the exceedingly complicated economic and political environment.

October 22, 2021

Russia accused of weaponizing gas supplies amid Europe’s ongoing energy crisis. Putin appears to be exploiting Europe’s energy crisis to get EU approval for Russia’s Nord Stream 2 pipeline that bypasses Ukraine, transferring gas from Russia to Germany. While Putin insists that he hasn’t been withholding gas destined for Europe pending the project’s approval, the International Energy Agency has stated that Russia could be doing more to increase gas availability. Natural gas prices in Europe and Asia are reportedly at record highs, due to a combination of increased demand post-Covid, extreme weather, and speculation on the EU’s emissions market, and with winter nearing Europe is looking to ensure the safety of both its economy and citizens. While Putin blames Europe for not storing enough gas after the harsh winter of 2020-2021, he has also remarked that if the Nord Stream 2 is approved he’s 100% certain that Europe’s energy woes would be resolved. Further, it will offer Putin the welcome consequence of endangering Ukraine’s gas supply by pushing Ukraine to the end of the new west-to-east receiving line.

ISIS-K continues to challenge Taliban authority with steady stream of destructive attacks. October has seen multiple, extremely deadly attacks against the Afghan Shi’a population carried out by members of ISIS-K, in what’s part of a larger effort for the group to disrupt any new order established by the Taliban. Two separate bombings of Shi’a mosques during well-attended Friday prayer sessions have resulted in at least 100 deaths and hundreds of injuries. ISIS-K has also been notably active in parts of the country that aren’t its traditional strongholds, like Kandahar, and the group has been brazen enough to kill Taliban police chiefs and other officials. The United Nations has called the most recent Shi’a mosque attack part of “a disturbing pattern of violence” and there isn’t going to be an easy or clean resolution. Weekly ISIS propaganda published via Telegram has further highlighted ISIS’ intent to target Shi’a throughout the Middle East, with particular attention to the ethnic minority Hazara Shi’a population of Afghanistan. Meanwhile, in addition to ethnic minorities, women, artists, and journalists continue to be targeted and disenfranchised by both ISIS-K and the Taliban.

Venezuela-US tensions rise after extradition developments of two key Venezuelan figures. Last weekend Alex Saab, a businessman accused of laundering money for Venezuela and a close advisor to Venezuelan President Nicolás Maduro, was extradited to the United States after being detained in Cape Verde since June 2020. US Secretary of State Antony Blinken remarked that the criminal case against Saab, who also has purported ties to Hezbollah, had transpired for over a decade, but Maduro immediately retaliated by shutting down scheduled negotiations with Washington and detaining six US oil executives. Earlier this week, the Spanish high court gave permission for another extradition to the United States, but this one pertains to a Maduro opponent− Hugo Carvajal, a Venezuelan former spy chief who faces charges of narcotics trafficking and collaboration with the FARC. Carvajal reportedly had a falling out with Maduro and could hold incriminating evidence against him. In the meantime, Maduro seems to be wasting no time upping his US defenses, announcing that Venezuela and Iran will sign a 20-year cooperation accord.

October 15, 2021

Cuban government opponents denied permission to march in Havana this November, protestors say they will continue without it. On Tuesday, Cuban local authorities rejected the request by a broad group of Cuban artists and dissidents, many reportedly based outside of the country, to hold a rally for civil liberties next month in Havana. The protest was initially scheduled for November 20 but changed to November 15 after the government suddenly designated the 20th as a National Defense Day. November 15, however, marks the date that Cuba is scheduled to reopen its borders to tourists after a two-year Covid-19 shutdown, and active measures of political dissent could be a major disruptor. Cuban authorities, who are on high guard after the rare and widespread anti-government protests last July, have asserted that the aspiring November protestors are linked to subversive organizations and aim for regime change, likely instigated by the United States. According to a statement on the dissident coalition’s Facebook page, protestors are planning to march with or without permission, subjecting them to a potentially violent response and even imprisonment as seen last summer.

United States holds two-day virtual summit on cybercrime, Russia not included. This week the United States held a two-day meeting with representatives from over 30 countries to discuss key cybercrime issues, like prosecuting ransomware criminals and the role of virtual currency in illicit payments, emphasizing that international collaboration is necessarily to thwart the global threat. Australia, Germany, India, and the United Kingdom each headed up a core session. According to a senior US official, Russia was not invited to the meeting due to “various constraints”, but future participation is not off the table. The United States initiated bilateral talks with Russia on ransomware over the summer, where President Biden reportedly shared information about criminal activity emanating from Russian territory, but Putin hasn’t responded with any visibly significant actions thus far. While major cybercrime actors from Russia, and for that matter China, won’t be easily deterred without direct action on the part of Putin and Xi, ransomware criminals often employ transnational networks to launder money across multiple countries and jurisdictions, and there could be opportunities for allies to block criminal behavior along the way.

Iraqi parliamentary election results signal disillusionment with Iran, broader Iraqi political apparatus. Earlier this week, allies of Shi’a cleric Moqtada al-Sadr gained the bulk of Iraqi parliamentary seats, upsetting Iran-backed groups who did much better in 2018 and are already stating they’ll appeal the election results. In recent years, al-Sadr, who is remembered for leading a resistance against US troops back in 2003, has adopted a nationalist bent and gained momentum in his rallying cry against corruption and all foreign interference in Iraqi affairs− particularly by the United States and Iran. But in addition to revealing significant divisions among Shi’a factions in the country, the recent elections showed a great disillusionment of politics in general. Voter turnout of about 40% marked a record low in the post-Saddam Hussein era, indicating widespread distrust of Iraqi politicians and general skepticism about the ability for citizens to affect change; the number of younger voters was especially low.

October 1, 2021

New and rejuvenated alliances surface to curb threat of China, Iran. Last week the United States, India, Japan, and Australia met at the White House for the first in-person gathering of the reinvigorated Quad Security Dialogue since Biden took office. Although the Quad isn’t a military alliance and there is no formal defense pact, it has the potential to be a powerful strategic partnership given the significance, positioning and shared priorities of the nations involved. India’s presence is particularly notable given its historic resistance to joining security alliances. Vietnam, South Korea, and New Zealand, so-called Quad Plus members, could also come to lean more heavily on the alliance depending on China’s trajectory. The new Australian, US, and UK “AUKUS” pact likewise adopts a group strategy to counter China’s dominance in the Indo-Pacific.

Separately, in the Middle East this week, Israel’s foreign minister traveled to Bahrain in a historic first visit to inaugurate the Israeli embassy in Manama‒ the two nations are expected to sign memorandums of understanding on technology, economics, and water among others. In a meeting that many would have felt impossible just several years ago, the Israeli and Bahraini foreign ministers discussed “shared threats” and sent a clear signal to Iran that they’re willing to go beyond status quo relations to keep their aggressive neighbor in-check.

Implementation of central bank digital currencies likely to grow as pilot finds the concept can save time and money. Recent results from a Bank of International Settlements (BIS)-backed pilot study involving the central banks of Hong Kong and Thailand indicates that cross border payments made via digital forms of fiat currency could reduce transaction time from days to seconds and costs by up to 50%. Over 80 nations are reportedly exploring central bank digital currencies (CBDCs), with China taking the most aggressive approach by simultaneously piloting the digital yuan and making other cryptocurrencies illegal entirely. CBDCs are digital versions of fiat currency and they’re backed by the government which makes them less volatile, and less anonymous, than cryptocurrencies like Bitcoin. With CBDCs, governments hope to capitalize on both blockchain technology and the success of digital payment systems like PayPal and WePay. CBDCs are touted to help nations better reach and serve unbanked citizens, but they also grant the government far greater insight into consumer data that’s currently only held by private fintech companies or banks. The Fed still isn’t entirely sold on the concept, recognizing that the risks of CBDCs include everything from hacking and surveillance, to disrupting the function of domestic financial institutions and the global payments system, but it’s likely going to be under pressure to come up with something given the prevalence of the effort.

To counter the threat of climate change, some lawyers suggest ecocide should be treated as an international crime. With climate change at the top of the global agenda, over the summer an independent panel of environmental and criminal lawyers drafted a proposal to amend the Rome Statute of the International Criminal Court (ICC) to include ecocide as the fifth international crime. The addition would put ecocide along genocide, war crimes, the crime of aggression and crimes against humanity, and would make private actors like investors and business leaders liable to criminal prosecution. The panel has defined ecocide as “unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts.” The definition emphasizes that punishable acts must cause severe and either widespread or long-term environmental damage. The ICC can’t investigate corporations or governments, but individuals who are part of larger groups could be charged. Notably, the addition of ecocide would allow the ICC to prosecute the crimes even if they take place during times of peace where currently environmental violations are only illegal during times of war.