What We're Watching Today, August 14, 2024

Overview

What We’re Watching Today is 1,406 words and a 9-minute read.

Global: US, Canada and Finland to jointly build polar icebreakers; friendshoring strengthens collective security

On the margins of the NATO summit, the US, Canada and Finland signed an agreement to jointly build polar icebreakers, addressing a strategic vulnerability to NATO operations in the Arctic circle.

Our Take: A combination of military interests, technological advancements and climate change has moved the Arctic up in priority for NATO. The addition of two Arctic nations, Sweden and Finland, means that seven out of eight Arctic nations are NATO members. Russian aggression and Article 5 obligations incentivize NATO to increase its defensive capabilities on its northern flank. The deal to jointly produce icebreakers is not just a model of friendshoring, but of the strength of collective security.

Europe: With fighting in Kursk, Central European countries risk early cut off of Russian gas supplies

The agreement permitting Russian gas transit to Europe through Ukraine expires in 2024, and the Ukrainian government has no intention of extending it or concluding a new deal. With fighting in Kursk region, a major transit plant is now located in a battlefield, placing the transport infrastructure at risk.

Our Take: There are only a few operational pipelines transporting Russian gas to Europe. The Urengoy-Pomary-Uzhgorod pipeline brings gas via Sudzha (in the Kursk region), where the gas is piped towards Slovakia. There the gas pipeline divides, one branch going to the Czech Republic and the other Austria. Hungary, Slovakia and Austria are the main consumers. Ukraine wants to end this last trade agreement with Russia, with Ukrainian leaders asserting that European gas customers have had more than two years to set up alternative suppliers. The Sudzha transit station is currently in the zone of conflict with the Ukrainian incursion into the Kursk region. If it is damaged or destroyed during fighting, Gazprom would turn off the flow. Restarting it would be subject to political and legal considerations. Central European countries risk being cut of far earlier than the end of 2024, when Ukraine’s contract with Gazprom ends. There are alternative sources, but these are more expensive. Hungary and Slovakia are expected to be the most vocal in their objections.

Middle East: Support for attacks on Hizballah grow in Israel

Support for an offensive against Hizballah is reportedly growing in Israel, which since October 7 has exchanged escalating attacks with the Iran-backed Lebanese armed group over its northern border.

Our Take: Far-right members of Prime Minister Netanyahu’s governing coalition have been calling for war with Hizballah for months, and increasingly even centrist politicians, like Netanyahu’s rival Benny Gantz, have called for Israeli strikes on Lebanese infrastructure, a move that would likely prompt a wider war. Analysts expect that any conflict would be deadlier and more protracted than the 2006 war between the two parties, as both Israel and Hizballah have improved their arsenals, and Hizballah has become more politically insulated by Iran’s strengthened “axis of resistance.”

Asia-Pacific: Japanese Prime Minister Fumio Kishida announces resignation

Japan’s Prime Minister Fumio Kishida announced on Wednesday that he will step down next month, yielding to public dissatisfaction over political scandals and rising living costs during his three-year tenure, and sparking a rush to find his successor.

Our Take: Prime Minister Kishida’s resignation underscores an ongoing crisis of confidence in Japanese politics, which may further erode public trust in the ruling Liberal Democratic Party (LDP). The LDP’s internal challenges and inability to address key economic and social issues could heighten voter dissatisfaction, potentially leading to increased political volatility. Additionally, the lack of strong leadership during a period of geopolitical tension with China, North Korea, and Russia may weaken Japan’s ability to navigate its security challenges effectively.

Read More: Reuters, New York Times [paywall], Nikkei Asia [paywall], East Asia Forum

Africa: Africa CDC declares mpox a public health emergency

The Africa CDC declared the current mpox outbreak a public health emergency affecting continental security, the first such declaration since the agency’s establishment in 2017.

Our Take: Mpox, formerly known as monkeypox, previously spread widely outside of Central and West Africa for the first time in an outbreak between 2022 and 2023. Though infections have largely subsided in the US and Europe, limited vaccine availability and the emergence of a more transmissible strain in Congo, raises concerns about the virus’s potential to trigger another broader international health crisis. The US CDC has been monitoring the outbreak in Africa, particularly in the DRC, and while the current risk to the American public is low, the agency alerted doctors to be on the lookout for the new strain that is more virulent than the variety that caused a global outbreak in 2022.

Trade and Compliance: Western governments hold off on new sanctions against Venezuela’s Maduro

Over two weeks after Venezuelan President Nicolas Maduro declared his reelection victory, the US and other Western nations have shown little immediate intention of taking strong action despite widely condemning the election as fraudulent.

Our Take: The lack of decisive action from the US and other Western countries following Maduro’s disputed reelection in Venezuela risks entrenching his regime further while weakening international credibility in supporting democracy. The measured response may inadvertently embolden Maduro, reduce leverage over future negotiations, and lead to prolonged political instability in the South American country. Moreover, this approach could heighten regional migration issues, particularly impacted the US and neighboring countries.

Read More: Reuters, Foreign Policy [paywall], Council on Foreign Relations

Climate Change: Extreme heat responsible for the deaths of more than 47,000 people in Europe last year

The Barcelona Institute for Global health published a new report, finding that countries in southern Europe were the hardest hit by extreme heat. With the hottest temperatures on record, more than 47,000 people died as a result of heatwaves.

Our Take: Extreme heat kills. In the US, it is the top weather-related cause of death, killing more people most years than hurricanes, floods and tornadoes combined, according to the EPA. People underestimate the impact of exposure to extreme heat, how it can damage the central nervous system and other vital organs very quickly. Governments are increasingly adopting policy approaches to mitigate against the risks of extreme heat, by media campaigns to raise awareness, appointing Chief Heat Officers to focus on delivering heat solutions, and creating programs for heat resiliency in urban areas for vulnerable populations.

ESG: World Bank issues largest-ever outcome bond tied to Amazon reforestation

The World Bank issued a first-of-its kind bond linked to reforestation in the Amazon. The nine-year, $225 million, principal-protected bond is the largest outcome bond the body has ever priced.

Our Take: The World Bank said this issuance marks the first bond to link investors' financial returns to carbon removal, a departure from previous deals tied to the sale of carbon credits from avoided emissions. The carbon removal market is relatively young in comparison to avoided emissions or carbon offsets, the latter of which has faced increased scrutiny in recent months. Carbon removal technology is somewhat controversial, and often expensive; critics see avoiding emissions as a much more effective – albeit much more difficult – way for companies to meet net-zero requirements. This new outcome bond is an effort by the World Bank to incentivize the scaling-up for Amazon reforestation and carbon removal market more broadly.

Read More: Reuters, MIT Technology Review