What We’re Watching

What our analysts are watching and key events they are keeping an eye on
29th November 20217 min

New COVID variant discovered. Protests against fresh Covid-19 restrictions rocked Europe even before the new third strain was discovered of the virus in the past week. Demonstrations already broke out in places such as Brussels, Vienna (Austria entered its fourth national lockdown), Rome and Amsterdam. Austria is the first European country to impose compulsory vaccinations. Police resorted to use of water cannons and firing shots to quell the rioting. Many opposed newly imposed lockdown measures like shutting down of shops after 20:00 and government plans for making Covid passes compulsory (which restrict access to venues like museums and bars for the unvaccinated). Many countries were already reporting a surge in coronavirus incidences with Germany hitting a record high. The World Health Organization (WHO) said it was “very worried” about rising coronavirus cases on the continent and have pressed for measures being tightened across Europe in absence of which half a million more deaths could be recorded by next spring.

On Wednesday 17th November the third variant of the COVID-19 virus was discovered in South Africa leading many nations on Friday to issue safety measures, including banning those travelling from South Africa. On Monday 29th November, the World Health Assembly, the decision-making body of the World Health Organization, will meet in a special session. They will hear that vaccination rates in the six countries now subject to travel bans are still dangerously below the 40% target that was set for December.  Whilst the world’s richest nations promised to distribute the vaccines to poorer nations, former UK Prime Minister, Gordon Brown confirmed: “Western countries are destroying surplus doses of vaccine while the poorest nations go without.” The global economy was already struggling with economic growth, global supply chain problems, energy blackouts in China and opposition to vaccines as well as another lockdown during the festive Christmas season. We will be watching for the fall out and its impact at the geopolity.  

See our analysis COVID-19: One year on

Erdogan – MBZ meeting.  UAE ruler Sheikh Mohammed bin Zayed al-Nahyan, one of the Arab world’s most influential leaders, met Recep Tayyip Erdogan at the presidential palace in Ankara on Wednesday 24th November. He was visiting Turkey for the first time in almost a decade with commentators calling it a ‘landmark moment for the geopolitics of the region’. The Turkish-UAE relationship has been tense for the best part of the last decade when Turkey and the UAE backed different factions in the Arab uprisings in 2011. A number of bilateral agreements were signed in areas of trade, energy and environment, which will improve economic relations between the two nations. Turkey and the UAE have clashed diplomatically for years over their divergent views on political Islam in the region, a competition that has played out in various proxy theaters that included Syria and Libya. Despite all the press releases and statements, little has been revealed on any substantial political issues and we will continue to watch for any agreements on such subnational regional issues.

See our analysis the geopolitics of the UAE

Turkey currency crisis. Protests broke out in numerous cities over the collapse of the Turkish Lira this past week as the Turkish lira reached 13 Turkish lira to the dollar, which is a new record. In Istanbul and Ankara, protesters called for the government and members of the ruling Justice and Development Party (AKP) to resign. They also clashed with police in Ankara. Turkey’s currency has been in crisis for many years as Turkey’s debt is nearly half its GDP and most of it is held in dollars. Amid the COVID-19 pandemic, the Turkish lira plunged to all-time lows following the replacement of Central Bank chief Naci Ağbal with Şahap Kavciouğlu. Erdogan has taken effective control of the nation’s central bank and turned the institution into another entity to be used for his political agenda. His erratic and short term goals have now grown into the wider economy and his popularity has now reached a point where victory in the 2023 elections looks doubtful. We will be watching the response against Erdogan from his rivals.

Iran-US Nuke talks to resume. After a six-months hiatus the Joint Comprehensive Plan of Action Commission will meet on Monday 29th November in Vienna to discuss Iran’s nuclear program. Talks were halted as Iran held national elections, and talks now resume amid regional and global concerns over Iranian nuclear program developments made since the JCPOA was signed back in 2015. Many differences remain between the US and Iran which will make progress slow and difficult. We will be watching for any attempts by Iran’s new leader wanting to reopen previously agreed terms. 

Russia and China agree new military pact. Russia’s defence chief on Tuesday 16th November signed a roadmap for closer military ties with China, pointing to increasingly frequent US strategic bomber flights near both countries’ borders. During a video call, Defense Minister Sergei Shoigu and his Chinese counterpart Wei Fenghe “expressed a shared interest in stepping up strategic military exercises and joint patrols by Russia and China,” according to the Russian Defense Ministry. The roadmap, capped a year that has seen an unprecedented growth in military cooperation, including large-scale war games in China’s Ningxia in August, when Russian troops became the first foreign forces to join a regular Chinese drill, as well as announcements to jointly develop military helicopters, missile attack warning systems and even a research station on the moon. For China, Russia is the biggest supplier of its weapons and the second-largest source of its oil imports. And for Russia, China is its top country trading partner and a key source of investment in its energy projects, including the Yamal LNG plant in the Arctic Circle and the Power of Siberia pipeline, a $55 billion gas project that is the largest in Russian history.

Pakistan’s debt gets worse. On Friday 19th November Pakistan’s national assembly was informed by the Ministry for Finance and Revenue about the nation’s debt situation. In a written answer the department confirmed that Pakistan’s external debt and liabilities increased from $95 billion in 2017-18 (When Imran Khan’s PTI took power) to $127 billion as of September 30, 2021. The external debt and liabilities jumped up by $32 billion only in the last three years and three months! Not surprisingly Prime Minister Imran Khan said the “biggest problem” is that the government doesn’t have enough money to run the country. He added that the rising foreign debts and low tax revenue had become an issue of “national security.” All of this takes place as inflation has been in double digit territory for most of the PTI term. Pakistan will be heading into elections in 2023 and the PTI government is already finding its allies jumping ship amid the worsening economic situation.

New German government. Two months since Angela Merkel’s CDU suffered one of its worst defeats in government, Germany’s center-left Social Democratic Party (SPD), the environmentalist Greens and the pro-business Free Democratic Party have agreed a three way coalition government and will now hold internal votes to ratify the coalition agreement. This brings an end to the 16 year rule of Angela Merkal. The agreements included holding a vote in the Bundestag on the week of 6th December to appoint SPD leader Olaf Scholz as chancellor before the final European Council summit of the year, which will take place in the middle of December. The new government has its hands full with COVID infections increasing and now a third strain identified. 

Listen to our podcast German Elections: A future without Merkel

British troops to return to Germany. In a u-turn, the British army is to base hundreds of armoured vehicles in Germany, just over a year after marking its official withdrawal from the country, in a move designed to help bolster Nato as tensions with Moscow over Ukraine remain high. Under plans described as a “radical” restructuring of British land forces, the UK government announced on Thursday 18th November that a Nato base at Sennelager, near the German city of Paderborn, would become one of three new “regional land hubs” for the British army, alongside Oman and Kenya. The move represents a U-turn just over a year after the UK ended a permanent military presence on German soil that had been maintained since the end of the second world war. The closure of the last British army military headquarters in Bielefeld last February was the culmination of a decade-long withdrawal of 20,000 British service personnel from the country. “We are putting a substantial number of our armoured vehicles forward in order to be able to move more quickly should they be required anywhere on the continental [European] land mass,” Lieutenant General Ralph Wooddisse, commander field army, said.

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