Overview
What We’re Watching Today is 1,204 words and a 7-minute read.
Global: 2024 is the super election year set to reshape global politics
Almost half of the world’s population will go to the polls this year to choose their government leaders, with political stakes high, with the potential to impact key regional and global politics.
Our Take: Citizens around the world have faced great uncertainty over the past four years, with the global pandemic, disruptions to global trade, inflation, food insecurity, wars, mass migrations, growing impacts of climate change, plus more. Incumbent politicians will be rated on how well they did, with many being shown the door. While political change is the natural part of the democratic process, political trends show a rise in support for illiberal actors promising security and economic protections through authoritarian alternatives, which poses increased risks of democratic backsliding.
Read More: Reuters, Carnegie Endowment for International Peace, The Economist [paywall]
Europe: Georgia faces more consequences for adoption of foreign agents law with the EU freezing military aid
The EU announced that it has frozen 30 million euros ($32 million) in military aid to Georgia and will gradually reduce aid to the Georgian government after Tbilisi declined to walk back the new “foreign agents law.”
Our Take: Georgia’s adoption of the foreign agents law, despite multiple warnings from the EU that the authoritarian measure is inconsistent EU core principles and values and its candidacy status as a member of the EU, is now triggering consequences. The EU is concerned the law will be used to crackdown on civil society ahead on nationwide elections in October and steer the country closer to Russia. Behind the ruling party Georgian Dream is billionaire Bidzina Ivanishvili, an unelected and pro-Russian businessman with significant political influence. Critics believe Ivanishvili is colluding with Russian President Putin to establish control over Georgia, acting as a local proxy to keep the country outside the EU and within Russia’s sphere of influence.
Read More: Reuters, Edgemont Royal Institute, Foreign Policy [paywall]
Middle East: Military draft turmoil in Israel
Israel approved a plan to begin drafting ultra-Orthodox Jews, or Haredim, into the Israeli Defense Forces, kicking off political controversy.
Our Take: Military service for Israel’s Haredim has long been a third rail of Israeli politics – and touching it now could threaten Netanyahu’s already tenuous grasp on his fractious governing coalition. Haredim regard conscription exemptions as key to keeping their constituents in religious seminaries and out of a melting-pot army that might test their traditional customs, while more moderate Israelis see exemptions as unfair - and increasingly untenable as Israel fights a grueling war against Hamas in Gaza. Enforcing conscriptions could threaten Netanyahu’s fractious coalition, held together by ultra-conservative parties, at a time when Netanyahu’s approval rating is low enough that he would likely not win reelection in snap polls.
Read More: Reuters, Council on Foreign Relations
Americas: US pushes Mexico to work harder on Chinese tariff evasion
Washington implemented new tariffs aimed at stemming the flow of Chinese-made steel into the US from Mexico. The new rules impose a 25% tariff on Mexican steel that is melted or poured outside of North America early in the production process.
Our Take: The new tariff is an effort to close a loophole that has allowed cheap, state-subsidized Chinese metals to enter the US via Mexico, circumventing existing tariffs. The tariffs are part of a transatlantic push to keep China from dumping cheaply-made goods of all kinds in foreign markets, in this case depressing the prices of domestic US steel businesses, and part of an effort to push Mexico to work harder to prevent Chinese tariff evasion. China denounced the method as protectionist, while US industry voices said the US had not gone far enough to stem imports from Mexico, which has increased steel trade significantly to the US significantly since signing an agreement to limit metal exports in 2019.
Read More: New York Times, Wall Street Journal [paywall]
Asia-Pacific: Pakistan to extend the stay of Afghan refugees for one year
The Prime Minister of Pakistan announced on Wednesday that the country will prolong the expired registration cards of nearly 1.5 million Afghans for an additional year, following a request from the UN refugee commissioner to halt the repatriation of refugees.
Our Take: The extension of expired registration cards for Afghan refugees in Pakistan offers a temporary reprieve for Afghans in the country, though uncertainty looms large. The Pakistani government continues to uphold its repatriation plan for undocumented foreigners, and it is unclear whether card holders will be exempt from future deportations. Further, the visit from the UN refugee commissioner likely forced the Pakistani government’s hand in making this decision, and should scrutiny recede, the government could quickly change course.
Read More: Reuters, NDTV, Council on Foreign Relations
Trade and Compliance: Switzerland implements additional EU sanctions on Russia
The Swiss government announced on Tuesday that it has broadened its sanctions on Russia, aligning with the European Union's recent measures against Moscow due to its continued aggression towards Ukraine.
Our Take: Switzerland's expansion of sanctions against Russia to align with EU measures follows up its initial sanctions on Moscow and notably diverges from the country’s historical neutrality, and reputation as a safe haven for Russian money. It presents an opportunity to exert further pressure on Moscow over its actions towards Ukraine. However, this move may also carry potential risks such as retaliation from Russia or potential economic impact, given that the sanctions target prominent individuals and entities in Russia's defense, financial, and trade sectors, potentially threatening Switzerland’s banking industry.
Read More: Reuters, admin.ch, NPR, CNN
Disruptive Technology: Biden announces $1.6 billion to develop computer chip packaging tech
The Biden administration announced on Tuesday that it would allocate up to $1.6 billion towards the development of new computer chip packaging technology, a significant move in US efforts to maintain a lead over China in producing components essential for applications such as artificial intelligence.
Our Take: The plan can potentially bolster the US's position in the global tech industry and reduce its dependence on foreign manufacturers, especially amidst increasing competition from China. However, there are notable risks, as the US currently only accounts for around 3% of advanced chip packaging, indicating a significant gap to close. The success of the Biden administration’s recent chip investment initiative will heavily rely on the effective use of these funds and the ability of US companies to innovate and compete globally.
Read More: New York Times [paywall], Bloomberg [paywall]
ESG: EU provides guidance ahead of first CSRD reporting cycle
The European Securities and Markets Authority issued new guidance aimed at helping companies prepare for the first round of reports under the EU’s new Corporate Sustainability Reporting Directive (CRSD).
Our Take: The CSRD is a major update to the EU’s Non-Financial Reporting Directive (NFRD), significantly expanding the number of companies required to provide sustainability disclosures to over 50,000 from around 12,000, and introducing more detailed reporting requirements on company impacts on the environment, human rights and social standards and sustainability-related risk. The first reporting cycle is a significant step in implementing what will be the world’s most stringent environmental reporting requirement, which will apply to US businesses over a certain size listed in EU-regulated markets.
Read More: ESG Today, Sustainable Brands, PwC
