Geopolitical Highlights - Jan 8th, 2023

In the first week of 2023, there is significant activity with US Congress, China reopens its borders, while Russia and Ukraine make the Orthodox Christmas.

Greetings!

Its the first week of 2023.

(Before you know it, l will be saying its the last week of it!)

That said, l wish you all a Happy and Hopeful New Year.

(Hopefully thats still socially acceptable a week into it…)

Anyway, though the year has just started its already hectic and here some of the highlights to follow the coming week.

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EXCITING NEWS!

I just launched a YOUTUBE CHANNEL!

I will be using it to stream live conversations with guests, building on everything we did on Clubhouse and Twitter.

I will still be using Twitter Spaces but if you like to watch people during podcasts then please do join and add your comments when we go live!

I will also be doing weekly, even daily, sessions, where l share some of my personal reflections on geopolitical and global headline, breaking them down and adding (hopefully) useful commentary.

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118th Congress

Now, for the non-US readers here is a US-specific topic that you should follow.

(Soz US readers, just jump down to next section or see how a Brit explains US politics…)

A major development this week which is supposed to direct next weeks is the incoming new Congress after the US midterms in November.

Now, even if you have been living under a rock you’ll know Kevin McCarthy is in his 50,000th round of trying to be elected Speaker of the House.

Ok, its more like 13th, but its farcical at this point.

And this matters since Congress cant/wont start work, ie policy and legislation until someone is chosen. Members cant be sworn in either.

So, it just delays everything, which in a 2-year window is not long anyway.

And the lack of Republican (REP) or GOP consensus on who to nominate is just the start as it signifies this will be a problem for getting consensus on policy too.

Some of these divisions are driven my political principles, but its clear that some are just personal too.

Sentiments like these have prevailed in DC since l moved there just before the last midterms in 2018, and do exist within both parties.

But while the Democrats (DEM) can put aside frictional differences and keep getting behind their Minority Leader, Hakeem Jefferies, the Republicans are illustrating for the globe how divided and therefore, dysfunctional they remain.

(FYI, that’s not me defending the Democrats as free of issues.)

Most Rep’s want McCarthy, at least more than doing any form of compromise with the Dems; ie pursuing bipartisanship.

At time of writing McCarthy suddenly seems closer, having flipped a lot of resistors, but he’s had to make several concessions to them.

Interestingly, this paralysis in DC comes at a time that Mitch McConnell recently was shaking hands with Biden, highlighting that some can cooperate despite having differences on policy.

Then there is the Senate.

Which can’t do much without the House being able to act or pass legislation.

They can vote on consent to treaties or nominations but little else.

But most requires both houses to cooperate, but yea, that doesn’t look likely right now does it…

One point to look to later this year is an ability to reach ground on the debt ceiling - Reps want spending cuts, while Dems will likely reject that.

And so, dont raise the debt ceiling means potential default and so chaos for US markets.

But this is not the first rodeo of political paralysis and disagreement so at least, for now, it won’t be destabilizing.

But optics wise, what is happening in Congress doesn’t speak as well to Rep competency as the bipartisan meeting McConnell has done with Biden.

The Reps did badly in the midterms and so its likely some members of the party are wary of not allowing the party to fragment itself to such an extent it risks them performing worse in 2024.

At the end of the day, no Rep will wont to so stubbornly stick to their guns to the point that it risks the party’s survival - which some circles have begun to even float.

Watch this space.

China’s reopening

Again, you can’t not have heard of the covid calamity in China.

There is a podcast episode on this with James Palmer of Foreign Policy available here.

Sunday, 8th Jan will see the country open its borders to foreigners while many others have already restricted travel.

Most cases involve Chinese nationals needing to test before even travelling over concerns about new variants spreading.

Scepticism remains on how effective this will be.

Most countries have done better at vaccinating populations and moved off zero-covid policies yonks ago but that doesn’t prevent subvariants of say, Omicron still being possible.

China has complained over this, and some compare it to the penalization of Africa or the Global South when Omicron was discovered.

Its already driven tensions between China and others.

Questions remained for a long time over how the CCP would escape this corner it put itself in - they shifted from absolute lockdowns and draconian laws to suddenly opening it up as normal with no gradual, incremental steps, such by rolling out vaccines to limit pressure on healthcare systems.

What’s clear, the CCP is out of its depth and cannot go back from here.

Either direction the CCP pursue will yield costly and tumultuous challenges for them and undermine their ability to exercise their foreign policy due to internal instability.

What’s it mean for the economy? For social cohesion? For faith in the CCP and the Chinese style of governance?

Inevitably and, has already disrupted supply chains.

Which means that a seemingly forthcoming downturn for China will be echoed globally given how interlinked and overdependent the world economy is on China.

Even the biggest China hawks will still desire some degree of economic activity because that plays into your own prosperity and development.

The other concern is over China suddenly growing too much too fast after reopening as this would lead to inflationary pressure.

What could this do to energy prices?

China’s use of oil/gas dropped during the pandemic and that would change once they seek to restart activity, so how would this alter the already very volatile global situation?

And this all comes on the back of US-Sino relations trying to improve or at least re-establish.

China wants reassert it is back globally after the calamities of covid and doing so via strongly, focused diplomacy - consider how this was prior to the CCP Summit even in October.

Lastly, keep in mind the level of ambiguity and questions over the legitimacy of China’s data - they do this with almost everything to serve interests or portray a certain image.

Even with the near-collision of a Chinese jet fighter and US recon plane the CCP gave very different accounts…

Despite the US capturing the whole thing on camera.

Lastly, remember that innocent Chinese citizens are suffering making this a humanitarian crisis.

And all worsen because the CCP refuse to accept mRNA vaccines offered by Western states.

Russia-Ukraine Orthodox Christmas

Many Orthodox Christians celebrate Xmas 6-7th January including in the warring countries.

But given the war, Ukrainians in some places have chose to celebrate the Gregorian calendar version over the Julian as a way to distance themselves further from Russia.

This comes of the bat of Putin attempting to declare a unilateral ceasefire - something quickly dismissed by Ukraine.

Understandably over the belief it would be a false flag or feint for something else.

The ceasefire was criticised by others, and frankly its very rare, very unusual for the aggressor force to be the one to call for a ceasefire.

Unless there is a sense of poor fortunes within the battlefield and desire to take stock of the situation or at least gain a moments reprieve.

Russia has arguably hinted at being open to dialogue, though then Putin also states that is must be on his terms and that Ukraine accept no return of territories, which shockingly wasn’t a very appealing offer.

Putin has been quite out of character more broadly too. At least to me.

His appearance in front of camera with the Russian’s in fatigues was basically attempting to normalize war-time economic conditions.

He even referred to the war as a war no longer a mere special operation…

The fact he cancelled his huge annual address as l said before, l think speaks to that too.

And l do believe that this has also been influenced by the death of ~80 Russian soldiers who were killed by a Ukraine strike due to them using their phones close enough to the Ukrainians to pinpoint their location.

Up till this point, the death of Russian’s wasn’t important to the Kremlin.

We can see this in March when Russian’s radios were unencrypted allowing everyone round the world to listen in.

But that was different because the Russians’ along with most, assumed they would prevail, so it didn’t matter to the Kremlin the lives lost.

But not only did Ukraine defy expectations, they’re now capable and actively targeting sites within Russia - a very different calculus for the Kremlin and national security.

So, the potential for a call of a ceasefire may be partially driven by this.

The Patriarch Kirill, head of Russia’s Orthodox Church, has been a huge war advocate, and many see his exclamations round this and the ceasefire being able to stimulate or re-legitimise the war to Russians.

Plus, by trying to call the ceasefire the Kremlin can seek to portray themselves as the morally superior and responsible power.

While also demonising Ukraine as having little respect for religious believers and a push for peace.

Some analysts did also suggest that the Kremlin’s goal was to ensure no further losses of life during another major Russian holiday, which has already occurred.

And this comes off the bat of Germany and France - both more dovish over supporting/supplying Ukraine next to say Britain - announcing more provisions of vehicles and/or patriots.

While this ceasefire is Russia’s attempt to make movements, don’t expect any groundbreaking shifts to occur on the battlefield.

Bakhmut remains the hub of military engagement, but relative to what we saw in the fall or other periods of the war, movement on the ground has been quite sparse, and its unlikely that will change in the immediate term.

That said, still watch next week, as it is war, and you can just never tell.

What else to watch

Other than these 3 that l featured, keep a look for:

1. North American leaders meeting in Mexico

2. Benin holds parliamentary elections

3. The UN holds meetings on the Middle East and Colombian Peace Deal.

Lastly, be sure to subscribe to the new YouTube channel where you can watch live conversations between myself and guests, as well as my own weekly analysis of geopolitical and current trends.

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