October 20, 2023: Global News Roundup
"Vital to American security"—The world holds its breath as war spreads and economic depression looms
The Global News Roundup collects news stories from entirely international (non-US) media sources on variety of pressing global issues and events.
Good morning and welcome back to IPEwithSBB. In the month since I last covered international news, dynamics and trends that previously seemed more distinct have been violently blended together into a confusing and dangerous geopolitical and economic mash-up. Recent world events suggest we are facing a situation in which multiple Great Powers are being drawn into broader international conflict at the same time that a major global economic depression is unfolding. Even though I have closely followed and documented many of the dynamics that brought us to this point—from the shifting global balance of power and the rise of the BRICS to the Ukraine War and the emergence of the Whole World Debt Crisis—I am humbled and awestruck by the crushing gravity of the current moment.
International news over the last month was full of escalating international tension, conflict, and violence, including economic warfare, as the international balance of power shifted from a unipolar system in which the US was the reigning superpower to a multipolar system in which multiple, more evenly matched powers now vie for power, resources, and territory. With the Ukraine war still smoldering, other conflicts have erupted alongside it, indicating a kind of violent contagion, with war now erupting or poised to erupt in many places at once, not unlike how cracks on a car windshield expand and spread out from the initial crater formed by a rock’s impact. Lurking behind these conflicts are the military-economic blocs that have almost completely hardened, pitting the US-led bloc against the Chinese-led one (which includes Russia and Iran).
On September 20, ethnic Armenian forces located in Nagorno-Karabakh, a disputed territory claimed by both Azerbaijan and Armenia that has been a site of periodic conflict since the 1980s, surrendered to Azerbaijan, ending a 24-hour conflict. Mediated by Russia, the ceasefire agreement “said local Armenian forces would be completely disarmed and disbanded”, according to the BBC, and prompted “tens of thousands” of ethnic Armenians to flee the territory. This week, Armenian Prime Minister Nikol Pashinyan appealed to the European Parliament for support, citing long-standing concerns about “ethnic cleansing” of the Armenian population in Nagorno-Karabakh.
To the west of Armenia, across the Black Sea, another conflict has been brewing between Kosovo and Serbia. Recent tensions began in late 2022 with a dispute about license plates, one that recollected similar ethnically charged conflict involving license plates during the Serbian war with Kosovo in the 1990s. The dispute led to election boycotts and protests by ethnic Serbs that were reportedly backed by the Serbian government in Belgrade. Then, on September 24, “armed Serb paramilitaries ambushed a police patrol near the village of Banjska in the northern part of Kosovo, killing one police officer.” Some European officials, including the EU’s “top diplomat” Josep Borrell, called it a “terrorist attack”.
Earlier this week, Euractive quoted the former US ambassador to Kosovo, Philip Kosnett, who linked this local conflict to broader Great Power politics: “Efforts to coax Serbia into the arms of the West instead of China and Russia have not yielded results and it is time to wake up to a new approach, former US ambassador to Kosovo, Philip Kosnett, told Euractiv in an interview.” On Wednesday, the government of Kosovo requested support from KFOR, a NATO-led international peacekeeping force.
Meanwhile, tensions are also rising in the South China Sea between China and the Philippines, a US ally. Back in August, the Philippines accused China of using a water cannon to try to block “a Philippine military supply boat from delivering food, fuel and water to troops garrisoned on a decommissioned warship grounded on a reef in the South China Sea”. Al Jazeera framed the incident as part of a “long-running territorial conflict in the resource-rich waters, involving China, the Philippines, Vietnam, Malaysia, Taiwan and Brunei”.
Last week, the Philippines again raised concerns about “a Chinese navy ship [that] shadowed and attempted to cut off a Philippine navy vessel conducting a resupply mission”. The Philippines demanded that China stop it’s “dangerous and offensive” actions in the South China Sea, while China demanded that the Philippines cease its “provocations”. The US has been conducting joint naval exercises with the Philippines in recent weeks, while China continues to fortify and militarize islands across the South China Sea (some of which have literally been constructed on top of coral atolls). On Wednesday, Mena FN noted that the South China Sea was a “ticking time bomb waiting to explode”.
More dangerous still, two weeks ago, on October 7, the militant Palestinian organization Hamas launched a vicious surprise attack on Israel, prompting an immediate response from the Israeli military that included sustained missile attacks on and a blockade of Gaza, toppling apartment buildings and cutting off supplies of food, medical supplies, and electricity. Hamas, which has received funding in the past from both Iran and Israel, took hostages. It is uncertain how many hostages were taken (estimates are in the hundreds), their identities, how many are still alive, or where they are being held.
Amid fears of a wider war—because the Iran-backed, Lebanese militant group Hezbollah has been amassing soldiers and military equipment on Lebanon’s southern border with Israel and engaging Israeli forces; because the US is fully backing Israel and sending warships and troops to the region; and because Russia and China expressed their strong support for Palestine—on Wednesday, the same day US President Biden arrived in Israel to meet with Prime Minister Netanyahu, Brazil introduced a resolution to the UN Security Council to “pause” the fighting to try to address the humanitarian crisis in Gaza. The resolution secured 12 yes votes (China, France, Albania, Brazil, Ecuador, Gabon, Ghana, Japan, Malta, Mozambique, Switzerland, and the UAE), 2 abstentions (UK, Russia), and was ultimately vetoed by the United States. Notice how many traditional US allies, including France and Japan, voted to approve the resolution, indicating that this conflict is deepening rifts among the US and its allies.
(Image: “President Biden is greeted by Israeli Prime Minister Benjamin Netanyahu after arriving at Ben Gurion International Airport, Wednesday, Oct. 18, 2023, in Tel Aviv. AP Photo/Evan Vucci”, in the original here).
Yesterday, Russian President Vladimir Putin deployed jets with hypersonic missiles to patrol the Black Sea after the Russian military scrambled to prevent a British warplane from entering Russian air space earlier in the day. Ahram Online further reported that Israel’s military had been given the “green light” to launch a ground invasion of Gaza.
Then, yesterday afternoon, the US confirmed that one of its naval destroyers in the Red Sea, the USS Carney, shot down several missiles alleged to have been launched by Houthi rebels in Yemen (the Houthis have received extensive aid from Iran in the past): “It wasn’t immediately certain if they were aimed at Israel. One of the officials said the U.S. does not believe the missiles were aimed at the ship,” reported the Navy Times (a US-based publication). In his address to the nation last night, US President Biden committed to continuing to fund and arm both Ukraine and Israel, and noted that their success is “vital to American security”.
Woven through these conflicts, unevenly and in complex ways, is international resistance and coordinated pushback against Western power and influence, building on the momentum generated by opposition to the Ukraine war, monetary dominance of the US dollar and euro in the global economy, and French neocolonialism in West Africa, among other recent examples. At the moment, this dynamic is perhaps most visible in the Israel-Palestine conflict, with many protests against the war highlighting the US’s historic and widely detested role in the region (including decades of military aid to the Israeli government), including protests in the US itself. Last week, the French government banned pro-Palestinian protests, arguing it was necessary to ensure “public order”, while the British government is stepping-up arrests of protestors with calls from some leaders to “criminalize protest”.
(Image: “A Lebanese protestor flashes ‘V’ for Victory sign as fire rages behind the security gate of the US Embassy.” From The Standard, 10/18/2023, here).
For their part, China and Russia continued to stoke the anti-imperial flames, strategically leveraging the Israel-Palestine war to promote their own geopolitical interests. For example, in an article last week in the CCP-run Global Times on the occasion of the annual Belt and Road Forum in Beijing, the authors contrasted the approach of the US and its allies with that of China, presenting China as the antidote to the failed Western-led “globalization” project:
Amid turbulence as conflicts and bloodshed continue around the globe in countries like Palestine, Israel, Ukraine and Russia, members of the international community have never stopped seeking hope and solutions to make development sustainable, and maintain or restore peace and stability, with leaders and representatives from more than 140 countries as well as 30 international organizations arriving in China to participate in the upcoming Belt and Road Forum (BRF) for International Cooperation to be held in Beijing from Tuesday to Wednesday…
The disadvantages and problems of the old US-dominated unipolar world order and West-dominated globalization have been exposed, and the world is asking for new solutions and more contributions from China, experts said.
(Image: “Xi Jinping met his ‘old friend’ Vladimir Putin at Beijing’s Great Hall of the People”, taken at this week’s Belt and Road forum in Beijing, from Free Malaysia Today, 10/19/2023, here.)
Consistent with the rapid deterioration of international political and military relations, the global economy has also taken a nasty turn over the past month. Not only is economic warfare intensifying, but problems with US bond markets, stock markets, and banks are spiraling out of control.
To begin, it seems that another natural gas pipeline has been sabotaged, this one running between Finland and Estonia through the Black Sea. The Finnish government last week noted that damage to the pipeline, as well as an undersea telecommunications cable, “may have been a deliberate act”. The damage did not compromise Finland’s energy supplies and telecom connectivity, nor does the Finnish government believe there to be any military threat against Finland.
OPEC, the cartel of oil-exporting countries, continues to wage its own economic war, putting the screws to Western oil-importers in the US and Europe. Having recently extended its production cuts through at least the end of the year, last week OPEC “stuck to its forecast for relatively strong growth in global oil demand in 2023 in 2024”, citing global economic “resilience” and strong expected demand from China, putting upward pressure on oil prices. This week, oil prices spiked on Wednesday following Iran’s suggestion for an oil embargo on Israel, a suggestion that has so far sparked little interest among other OPEC members. In a classic tit-for-tat, mercantilist move, the US eased sanctions on oil-exporter Venezuela on Wednesday, which briefly tamped down oil prices until the news broke Thursday about those Houthi missiles being shot down, which again sent oil prices sharply upward.
On Tuesday, the US made another volley in the Chip Wars, announcing a new set of trade restrictions on American-made semiconductors exported to China and 21 other countries: “The updated package of controls change the rules from last October to impose controls on additional types of semiconductor manufacturing equipment, and to expand license requirements for chipmaking equipment to apply to the PRC and Macau, as well as 21 other countries for which the US maintains an arms embargo,” according to the South China Morning Post. Among other consequences, the new controls will “severely limit” the ability of US-based Nvidia to sell high-end chips to China, one of its major international markets (Nvidia has previously stated that as much as 25% of its “data center chip revenues” come from China). Nvidia, which is among the top 5 most heavily weighted companies in the S&P 500 index, saw share prices fall about 5% on Tuesday. And Nvidia isn’t the only US company in trouble, with recent news from Tesla, Charles Schwab, and Goldman Sachs, among other heavy hitters, clouding the mood in the financial presses.
US bond markets have also been struggling with surging yields for longer duration bonds, magnifying losses across the financial system (the same “unrealized losses” that got Silicon Valley Bank in trouble last spring). The Financial Times reported yesterday that, “One of the top executives at Blackstone Group, the world’s largest alternative asset manager, has warned that the recent sharp increase in long-term US government bond yields will soon hit consumers and slow the economy….“When 30-year mortgages and car loans cost you 8 per cent it will impact consumer behavior,” said Gray.”
US Treasury bonds are among the most widely collateralized assets in the global financial system, meaning that falling bond prices are threatening devastating margin calls. As WSWS noted last month, “The US Treasury market forms the foundation of the global financial system”, meaning that a “[m]argin deleveraging, if disorderly, has the potential to dislocate core fixed income [i.e., bond] markets.” Keep in mind that China, Saudi Arabia, and Brazil, among others, have been dumping Treasuries in recent months, a trend I expect will pick up pace if the war in the Middle East expands and US economic troubles deepen. During the month of September alone, the Daily Hodl reported that China shed $13.6 billion in US government bonds.
On Thursday, 10-year US Treasury bond yields hit a 16-year high, US stock markets were trending lower, European shares fell to a two-week low, and gold strengthened as investors sought out safe-havens (see here).
Things I’m keeping an eye on:
1. Growing insecurity for ordinary people: As I’ve noted many times before, rising levels of geopolitical risk wreak havoc on poor and working people around the world, not just because of the risk of physical violence (which is profound, and increasingly so as conflict spreads), but also because of the impact of conflict and war on trade, currency values, and prices. Oil and food price inflation consigned hundreds of millions of people to poverty after the Ukraine war began, and, as new conflicts emerge, I expect the troubles faced by households around the world to deepen and multiply.
Egypt, among other countries proximate to the Israel-Palestine conflict, is a major player in global agricultural trading (e.g., wheat, cotton). The Straight of Hormuz and Suez Canal are critical conduits for global trade. More oil passes through the Strait of Hormuz every year than any other waterway (around 25-30%), while 12% of world trade and 30% of global container traffic flowed through the Suez Canal in 2021. And, large quantities of the world’s oil comes from the Middle East (the region accounted for 31% of the global oil production in 2020).
2. Great Power conflicts: I don’t have to tell you how much more dangerous the situation in the Middle East becomes as the US, UK, Iran, Saudi Arabia, Russia, and/or China become more directly involved. Other hot spots I’m keeping an eye on include Kosovo, where KFOR may intervene (which would effectively open a 2nd NATO front against Russia), and the Philippines, where China and the US are poised for proxy conflict.
Thank you for putting this all in the view finder. Crushing gravity indeed.
Thanks for your in-depth coverage. There is so much to be concerned about.