Overview
What We’re Watching Today is 1,701 words and an 11-minute read.
Global: Russian military concern that arrest of Telegram Founder will compromise battlefield communications in Ukraine.
While the French government arrest of Telegram founder Pavel Durov as part of an investigation into child pornography, drug trafficking and financial crimes, the Russian military is concerned that battlefield communications could be compromised to western supporters of Ukraine.
Our Take: The Russian government response to the arrest of Durov has been quite vocal, despite Durov essentially abandoning Russia, acquiring citizenships in France, UAE and St. Kitts and Nevis, and re-domiciling Telegram in the UAE. Russian concerns that battlefield communications may no longer be secure would raise the stakes for the Kremlin. If the Kremlin assesses that Durov’s detention is a present security threat and shuts off access to Telegram from inside Russia, this could disrupt Russian military lines of communications, especially on the frontlines. Russian forces revert to using personal channels because of the poorly functioning official communications systems, which are reportedly overly centralized and not sufficiently agile for indirect fire operations. Russia’s relationship with France has hit a low over the arrest, and the Kremlin is accusing Washington of being behind the action. The arrest of Durov risks adding to Russian grievances against NATO against the backdrop of NATO member states debating whether to lift restrictions on Ukrainian use of long-range missiles inside Russia.
Read More: Wall Street Journal [paywall], Institute for the Study of War
Europe: As hard right parties gain supporters, UK seeks cooperation with progressive parties across Europe
On a visit to Germany, British Prime Minister Starmer called on progressive political parties to work together to challenge the allure of the far right, populism and nationalism.
Our Take: Starmer is reacting to the recent violent demonstrations in the UK against immigration and the increase in racist attacks. The UK is not alone. The rise of the far right in Europe is a growing trend. The Alternative for Germany (AfD) party is poised to win Sunday’s election for the state parliament in Thuringia and perhaps in Saxony. Germany’s state governments and parliaments oversee key security and judicial institutions and determine the composition of the federal parliament, Bundesrat. The AfD is anti-immigration, opposes military support to Ukraine and is pro-Russian. The AfD is unlikely to obtain a majority of votes and would need to join with another party to form a coalition government. Thus far, no other party has indicated it would be willing to sit with the AfD in a coalition. In the opposition, the AfD would be able to block certain decisions and paralyze the legislative process. Businesses are flagging the risks of extremism to the German economy in the east, which has been catching up with western Germany over the past decade.
Read More: Reuters, Reuters, Atlantic Council, German Marshal Fund
Middle East: Israel risks third front in West Bank
Israeli forces conducted a major operation in the occupied West Bank, carrying out mass arrests and reportedly killing at least 11 in gun battles, including a West Bank militant commander. The raids are targeted at eroding the infrastructure that has enabled several terrorist attacks out of the West Bank in recent months.
Our Take: Israel has seen a spike in terrorist operations emanating from refugee camps in the West Bank in recent months. Hamas claimed responsibility for an attempted bombing in Tel Aviv this month, and pledged to continue such attacks for as long as the war in Gaza continues. Non-Hamas directed violence has also increased as sentiment in the region has become toxic due to the war in Gaza and rising settler violence. Israel risks opening a third front in its already consuming battles against Hamas in Gaza and Hizballah on the northern border.
Read More: Wall Street Journal [paywall], Washington Post [paywall], Long War Journal
Americas: Honduras ends extradition with US over Venezuela ties
Honduras announced that it will end its extradition treaty with the US after the American ambassador criticized a meeting between Honduras and Venezuela.
Our Take: Honduran officials said they feared the US extradition treaty (which had been in place since 1912) could be used as “a political weapon” against Hondurans linked to Venezuela’s illegitimate leadership. US-Honduran ties have suffered a few setbacks in recent years, including Honduras’ abandonment of formal ties with Taiwan last year, but the relationship remains important. Speed bumps in the bilateral relationship could presage the diplomatic quagmire in Latin America, where the US and a few allies – mostly European ones – have dug in their heels against recognizing Nicolas Maduro’s reelection, but many Latin American countries remain partners with Caracas.
Read More: New York Times [paywall], teleSUR English
Asia-Pacific: ASEAN countries see strong export rebound
Member states of the Association of Southeast Asian Nations (ASEAN) experienced a resurgence in exports for the second half of the year, as overseas demand for electronics rose amid the ongoing uptick in semiconductor chip investment.
Our Take: The recent surge in Southeast Asian exports, particularly from Thailand and Malaysia, highlights the region’s resilience and adaptability in a shifting global trade landscape. The revival in overseas electronics demand, coupled with strong agricultural exports, underscores emerging opportunities for ASEAN to solidify its role in global supply chains, particularly as Western economies continue to seek lesser reliance on China. ASEAN countries have a strategic opportunity to deepen intra-regional trade and invest in sectors poised for further expansion, such as advanced manufacturing and agricultural technology.
Read More: Nikkei Asia [paywall], Center for Strategic and International Studies
Africa: WHO announces mpox vaccines to arrive in DRC in next few days
World Health Organization (WHO) Director General Tedros Adhanom Ghebreyesus told reporters on Friday that mpox vaccines are set to reach the Democratic Republic of Congo (DRC) in the next few days to fight a new strain of the virus spreading throughout the country.
Our Take: The WHO’s plan to imminently send mpox vaccines to the DRC presents a critical opportunity to curb the ongoing outbreak and prevent further spread of the virus within Africa and beyond. The move could significantly alleviate concerns of another global pandemic by containing the virus at its source, significantly reducing transmission rates, particularly in high-risk areas. However, risks remain over the logistical challenges of vaccine distribution in conflict-affected regions and the possibility of vaccine resistance or limited efficacy against the new strain, potentially undermining efforts if not carefully managed.
Read More: Reuters, World Economic Forum, Gavi
Trade and Compliance: China’s use of renminbi for international transactions rises to record highs
Recent data from China’s State Administration of Foreign Exchange showed that the country’s use of the renminbi in cross-border transactions rose to record highs this year, bolstered by warmer ties with Russia and mutual support for the de-dollarization of international trade.
Our Take: Beijing’s increasing use of the renminbi in international transactions signals a continued shift in global trade dynamics, as China, along with other major emerging economies such as Russia and India, intensifies efforts to reduce dependence on the US dollar. This trend could result in a more multipolar currency landscape, potentially diminishing the dollar’s dominance over time. However, the renminbi’s path to becoming a major global currency remains gradual and uncertain, as its further expansion remains constrained by China’s capital controls and the entrenched global preference for the dollar.
Disruptive Technology: Companies weigh heightened cyber regulations
The Wall Street Journal reports that as cyberattacks become more salient challenges for companies and consumers across industries, regulatory measures in recent years have left many companies struggling with how to meet compliance.
Our Take: As companies grapple with the expanding landscape of cybersecurity regulations, they struggle to comply, particularly due to the fragmented and often conflicting nature of these rules, including confusion over a short time window allowed for victims to report breaches. This complexity increases the risk that businesses might be ill-prepared for more sophisticated cyberattacks in the future, as they divert resources toward meeting diverse regulatory demands rather than enhancing security measures. Potential remedies could involve greater regulatory harmonization between federal, state, and local governments, streamlining reporting requirements across agencies, or adopting a more coordinated approach to enforcement that reduces the burden on companies while improving overall cyber resilience.
Read More: Wall Street Journal [paywall], R Street Institute, Brookings Institution
Climate: Typhoon Shanshan floods Japan in strongest storm ever to hit the region
Typhoon Shanshan made landfall on Friday in Japan, triggering flooding and landslides far outside the storm’s center.
Our Take: Japanese authorities have issued evacuation orders to more than 3.3 million people in the Kyushu area and central and eastern regions, including Tokyo. This storm follows Typhoon Gaemi in July and Typhoon Ampil earlier in August, which also necessitated evacuations. Typhoon season in the Pacific runs from May to November and typically strike Japan each year. The outlook for the 2024 season in the West Pacific Basin predicted a below-average number of tropical storms and typhoons. The average for strong typhoons is two-to-three per season. However, the region has already had three, with the season only half-over. Comprehensive disaster planning can mitigate harm and lasting consequences of climate change to human populations and include government readiness and risk reduction, business continuity planning, and household preparedness.
ESG: OCC finds banks insufficiently prepared to incorporate climate risk assessments into decision making
The US Office of the Comptroller of Currency, a major banking regulator, reportedly sent a letter to bank CEOs in recent days describing the results of a its second annual climate risk management assessment. The OCC found that most banks were early in the process of incorporating climate risk into strategic decisions, and many did not sufficiently gauge their own exposure to climate risks.
Our Take: The OCC review identifies gaps that could become crucial for financial institutions to fill in coming years – either as a result of reporting requirements (already implemented in the EU and making their way through courts in the US) or simply to respond to increasingly chaotic effects of climate change on their own portfolios. While a consensus has emerged that climate change is a significant risk to global markets, incorporating that assessment into strategic decisions has lagged, due to resource and organizational issues as well as rising political divisions.
