GeoBITs
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Russia & Europe
Economy
Kazakhstan has no plans to form or join any allied state, said its presidential spokesperson Ruslan Zheldybai last week, noting that the integration process within the Russian-led Eurasian Economic Union (EEU) should be considered in purely economic terms.
The statement comes as Kazakh society debates deeper EEU integration—alongside fellow members Russia, Belarus, Armenia, and Kyrgyzstan—and seeks to distinguish such policies from Moscow’s so-called Union State with Belarus, which entails much more expansive ties. “Now they even share nuclear weapons,” said President Kassym-Zhomart Tokayev at the EEU Forum last week.
The Kazakh leader also called for enhanced EEU relations with Latin American counterpart organization Mercosur, Asian analogs like the Shanghai Cooperation Organization (SCO) and the Association of Southeast Asian Nations (ASEAN). He also urged for EEU free-trade agreements with the United Arab Emirates, India, Egypt, Indonesia, and Israel to be concluded more rapidly.
Technology / Cyber
Elon Musk’s Twitter last week withdrew from the European Union’s Voluntary Code of Practice against disinformation—an effort at self-regulatory standards for tech firms adhered to by Google, Facebook, and other industry partners since 2018.
As of the coming August, Twitter and others will be subject to the EU’s new Digital Services Act (DSA), however, which codifies many of the same obligations into law – bringing into question how Twitter ultimately aims to remain on the European market. Musk has fired or laid off a substantial number of the workforce necessary to ensure trust and safety compliance.
Politics
Russia’s refusal to minimize oil production in line with its obligations as a member of OPEC+ has drawn consternation from Saudi Arabia, according to reports last week. High-level Saudi officials have reached out to their Russian counterparts ahead of the informal grouping’s 4 June meeting, complaining that Russia’s output is putting a drag on global prices.
Deputy Energy Minister Aleksandr Novak, however, claims Moscow is adhering to all voluntary cuts agreed to last year. The International Energy Agency, however, assesses that Russia’s April output did not include promised cuts of up to 500,000 barrels-per-day.
Riyadh’s current budget plans assume $81-per-barrel, but current global averages remain several dollars below that level.
Military
US President Joe Biden gave Washington’s approval at the recent G7 conference for allies to provide Ukraine with US-made F-16 jets, in a welcome development for Kyiv. The UK and Netherlands similarly announced plans to build an international coalition to assist in procurement and training. There are roughly 3,000 such aircraft in service in over 25 countries.
Even so, analysts note the process will take time, likely months. Most Western capitals, for now, have signaled only a willingness to train Ukrainian pilots, while being reticent to pledge transfer, even with Washington’s green-light. “It’s not going to be a dramatic game changer,” said US Air Force Secretary Frank Kendall.
For its part, Moscow warned that countries sending F-16s to Ukraine would incur “colossal risks for themselves.” Such warnings have accompanied each stage of Western military support for Kyiv, however.
Society
Moscow has decided to cap the number of German employees allowed to work in the education and cultural sectors as of June, leaving hundreds of Germans now unemployed and packing for departure.
The move—including teachers at the German School in Moscow and the Goethe Institute cultural association—appears to be another round of tit-for-tat diplomatic expulsions. Last month, Germany and Russia each declared dozens of embassy staffers personae non gratae.
The latest round displays the deep strain in bilateral relations between the two countries, which used to share deep economic and cultural links.
China
Economy
Bank of America’s equities desk said the quiet part aloud: PRC equities are too cheap to bet against and too mediocre to go long.
Key economic indicators, like consumer consumption and the price of some commodities, suggest the economic recovery in the PRC is going much slower than many had hoped.
Technology / Cyber
South Korea’s government is apparently of two minds about preventing its chip manufacturers, Samsung and SK Hynix, from taking the marketshare leftover in China by Micron’s forced exit.
Financial Times reported last week that South Korea would not stop its companies from increasing exports to China, now Yahoo Finance is reporting the government is considering limiting exports.
South Korea is weighing the long-term relationship with the US, who provides security under its nuclear umbrella and anti-ICBM missile systems. A short-term gain in chip sales before China itself pushes South Korean firms from the market may not be worth damaging the relationship.
Politics
China’s Ambassador to the EU gave a wide-ranging interview on China’s relationship with the EU. The Ambassador emphasized supporting a quick resolution to the conflict in Ukraine, which would lock in Russian gains.
Ambassador Fu conceded that EU moves to “de-risk” supply chains were acceptable, that EU “dependence” on China is limited, and that China opposes moves to keep key technology out of China.
The Ambassador will continue to push EU countries to oppose export controls on China. Germany has waffled on supporting US-led export controls on chip-related technology and talent. China will try to tip other EU countries away from supporting the US and, subsequently, inveigh on Germany to abstain.
Military
China has declined the US invitation to have the countries’ secretaries of defense meet on the side of the Shangri-La Dialogue in Singapore this week.
China’s official reason was US sanctions on China’s secretary of defense.
China’s actual reason is that it perceives that it has leverage over the US by threatening accidental conflict escalation. The DOD values open lines of communication between militaries, and has a history of using such channels to avoid conflict during tense moments or accidents. China, which lacks a recent military history to inform their position, thinks the US will act more cautiously if DOD feels that they would be unable to de-escalate in the event of an accident.
Here, the PRC is wrong. The US will continue its regular operations which always entails risk of an accident.
Society
Government security services clashed with protestors in southern China over the planned, partial demolition of a mosque built in the 14th century.
The clashes featured an ethnic group that, besides its religious beliefs, has largely assimilated into majority Han culture—speaking Mandarin and broadly presenting as “Chinese.”
For those reasons, the protestors were largely met with sympathy online.
The masque’s new domes and minarets are set to be demolished before June 6. If protests continue, violence could escalate before this weekend, as the local government will do anything to prevent protests on June 3-4, the anniversary of the Tiananmen Square Massacre.