What We’re Watching

What our analysts are watching and key events they are keeping an eye on
4th October 20218 min

Pandora Papers reveal secret wealth of world leaders. In one of the biggest leaks of financial documents the secret wealth and dealings of world leaders, politicians and billionaires has been exposed. Nearly 35 current and former leaders and more than 300 public officials are featured in the files from offshore companies, dubbed the Pandora Papers. They reveal the King of Jordan secretly amassed £70 million of UK and US property. They also show how ex-UK PM Tony Blair and his wife saved £312,000 in stamp duty when they bought a London office. The leak also links Russian President Vladimir Putin to secret assets in Monaco, and shows the Czech Prime Minister Andrej Babis – facing an election later this week – failed to declare an offshore investment company used to purchase two villas for £12 million in the south of France. It is the latest in a string of leaks over the past seven years, following the FinCen Files, the Paradise Papers, the Panama Papers and LuxLeaks. Other revelations include members of Pakistan Prime Minister Imran Khan’s inner circle, including cabinet ministers and their families, secretly own companies and trusts holding millions of dollars. Other documents show how Azerbaijan’s ruling Aliyev family have secretly acquired UK property using offshore companies. We will be watching the potential fallout from these revelations.

Bomb Blast in Kabul. A bomb blast outside the Eid Gah Mosque in Kabul killed at least 5 civilians on Sunday 3rd October. It was the deadliest attack in the Afghan capital since the US forces left at on 15th August. Suspicion immediately fell on ISIL-K who have stepped up attacks on the Taliban in recent weeks. The attack will likely push internal security higher on the growing list of problems the Taliban will need to address since retaking power. Security along with the economy, foreign relations and domestic stability are just some of the key challenges the Taliban are grappling with.

See our analysis on the Taliban’s evolving strategy

Afghanistan’s banking system is near to collapse. This is how Syed Moosa Kaleem Al-Falahi, the Chief Executive of the Islamic Bank of Afghanistan told the BBC. He pointed out that panic withdrawals by depositors take place while banking units are not functioning completely. Mr Al Falahi also said the Taliban is looking for other sources of financial support, adding that “They are looking forward to China and Russia, and some other countries as well.” Afghanistan’s economy was already on shaky ground even before the Taliban took control. Afghanistan for the moment depends on foreign aid – about 40% of its gross domestic product (GDP) comes from international aid, according to the World Bank. America’s freezing of $9.5 billion of Afghanistan’s currency reserves has only made things worse. We will be watching China and Russia who the Taliban say they plan to work with to navigate this crisis. 

Tensions in Kosovo. Serbia and Kosovo reached an agreement to end a standoff at their shared border after matters escalated over a dispute over vehicle licence plates. Serbian tanks moved toward the Kosovar border after Pristina deployed special police units to areas of northern Kosovo, populated by ethnic Serbs, where protests erupted. The demonstrations were over a decision by Pristina to require cars with Serbian plates to replace them with temporary plates upon entering Kosovo. In response to the deployment, Serbia put its military on high alert. The EU has agreed an accord with both nations with NATO troops replacing the Kosovar police units on the border, which will coincide with the lifting of the Serb blockades. Kosovo declared independence from Serbia back in 2008, after a decades long NATO campaign. Serbia, still today, does not recognise Kosovo as an independent nation. 

French-Greek defence deal. Greece has agreed to purchase eight French-built warships as well as entering a new strategic defence partnership with France, a move the Greek prime minister said was “a first step towards European defence autonomy.” The defence agreement is the biggest defence deal Greece has had in this century. The $5 billion deal will provide Athens with three state-of-the-art Belharra frigates and three Gowind corvettes, with an option for one more of each. The ships would be delivered by 2026, with the first frigate arriving as early as 2024. The deal is much-needed for France after Australia reneged on a $66 billion deal to buy French diesel submarines. For Greece French military platforms will not include any substantial tech or industrial transfers.

UK army begins petrol deliveries as energy crisis gets worse. The energy crisis went from bad to worse in the UK as the army was called in to deliver petrol supplies. Nearly 200 servicemen, 100 of them drivers, began providing “temporary” support to ease pressure on stations. Ministers also announced that up to 300 overseas fuel tanker drivers will be able to work in the UK immediately until the end of March. There have been long queues at petrol stations for two weeks after a shortage of drivers disrupted fuel deliveries.

Energy crisis reaches China. Unprecedented power cuts in Northern China left millions without electricity, ground factories to a halt and sent workers to the hospital with carbon monoxide poisoning after ventilators lost power during a blackout. Facing energy cutbacks and shutdowns, key suppliers for Apple and Tesla are buying generators and stockpiling inventory to keep supply chains intact. The shortage of coal supplies, toughening emissions standards and strong demand from manufacturers and industry as the global economy began to pick up has seen rationing implemented during peak hours in many parts of northeastern China. China is a major energy consumer as well as the world’s largest exporter and any shutdown of factories will have a knock on effect on the global economy.

China the loan shark? China hands out at least twice as much development money as the US and other major powers, with most of it coming in the form of risky high-interest loans from Chinese state banks. These were the findings of a new report by AidData research lab at William & Mary, a university in the US state of Virginia. Over an 18-year period, China has granted or loaned money to 13,427 infrastructure projects worth $843 billion across 165 countries. The AidData researchers found that the Belt and Road project is facing its own issues. BRI projects were more likely to be associated with corruption, labour scandals or environmental issues than other Chinese development deals. China’s BRI and financing strategy is facing more scrutiny than ever and also being associated with burdening poorer nations. As this represents a key part of China’s foreign policy we will be watching for any changes by recipient nations to deals China has already struck. 

China urges US to join talks on arms control for space. The US has been urged to join China and Russia for talks on banning weapons in outer space, with Li Song, China’s ambassador for disarmament affairs, urging the US to stop being a “stumbling block.” “After the end of the Cold War, and especially in the past two decades, the US has tried its best to get rid of its international obligations, refused to be bound by new treaties and long resisted multilateral negotiations on PAROS [the 1967 UN resolution on the Prevention of an Arms Race in Outer Space],” Li said. According to the proposed treaty, signatories promise not to place weapons or threaten or use force in outer space, avoiding any activities that are “inconsistent” with the purpose of the treaty. But the US and its allies have rejected the proposal, citing a number of concerns, including the lack of restrictions on the development of ground-based weapons that could be used in space and failure to include verification mechanisms. 

China-US military talks. Defence officials from China and the US held two days of talks in a small sign of progress amid a continuing sharp downturn in relations. The secure video conference held 28th and 29th September was led by Maj. Gen. Huang Xueping, deputy director of the People’s Liberation Army’s Office for International Military Cooperation, and US Deputy Assistant Secretary of Defense for China Michael Chase. Chinese Defence Ministry spokesperson Wu Qian said the sides “exchanged in-depth views on relations between the two countries and the two militaries and issues of common concern.” However, he blamed “continuous provocation and containment” of China by the US for the “considerable difficulties and challenges” between the two militaries. In a statement issued in Washington, Department of Defence spokesperson Lt. Col. Martin Meiners said the meeting was “an important component of the Biden-Harris administration’s ongoing effort to responsibly manage the competition between the US and the PRC by maintaining open lines of communication with the PRC.” During the talks, he said the two sides held “a frank, in-depth, and open discussion on a range of issues.”

France says Europe must have its own defence force. French President Emmanuel Macron has renewed calls for his long-harboured desire to see an independent EU army. “We must, as Europeans, take our part in our own protection” said Macron, as he spoke publicly for the first time since France was snubbed out of a defence pact between the US, the UK and Australia. The remarks come as European Commission President Ursula von der Leyen told the European Parliament that the EU needs to bolster its military capabilities to confront security threats with military intervention. “What has held us back until now” she declared at her annual state of the union speech in Strasbourg, “is a lack of political will”. Talks of developing such political will have gained momentum in Europe in the wake of the shambolic US withdrawal from Afghanistan which French finance minister Bruno Le Maire said “should be a wake up call” and which has raised questions in other European quarters surrounding the supremacy of US military capabilities. As traditional alliances come undone, our analysts will be watching how EU powers collaborate over the establishment of an EU force to parallel NATO, and how France seeks to position herself as the ascendant power, in a Europe that looks at the US with increasing disdain.


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