Overview
What We’re Watching Today is 1,476 words and a 9-minute read.
Global: Heightened risks of war between Israel and Lebanon
Israel’s security cabinet authorized its military to respond to a deadly rocket attack from Lebanon over the weekend.
Our Take: From the early days of the Gaza war, Israeli military leaders have assessed that Lebanese Hizballah would not risk an all-out war with Israel, but remain content with low intensity conflict as a way of pressuring Israeli decision makers to curtail fighting in Gaza. Israeli deterrence is failing, demonstrated by the airstrike on Sunday that killed 12 Israeli children in the Golan. The Netanyahu government is under tremendous pressure to respond, or risk increased questions on its suitability to lead the nation in a time of multiple security crises. A war risks escalation beyond the region, given Iranian and Yemeni support for Hizballah, Russian’s new military relationship with Iran and cooperation in Ukraine, and US and Europe’s strategic interests to contain and roll back revisionist powers.
Read More: New York Times [paywall], Reuters, Center for Strategic and International Studies
Europe Risks: EU prepares trade strategy to deploy in case of second term for Donald Trump
The EU is preparing a carrots-and-stick approach for trade with a future Trump administration, offering a deal to reduce EU exports or targeted retaliation against punitive tariffs.
Our Take: EU leaders are preparing for a trade war, should Donald Trump win the US elections in November. They are taking a page from Trump’s playbook, preparing a tough negotiating strategy to push back against punitive tariffs the Trump team is discussing, drawing up their own list of US exports to hit with even higher duties. A US-EU trade war would have negative impact on the global economy.
Read More: Financial Times [paywall], German Economic Institute
Middle East: Erdoğan comments that Turkey could enter Israel to support Palestinians, potentially a domestic political appeal
Turkish President Erdoğan made comments signaling that Turkey could invade Israel in support of the Palestinians, a significant escalation in rhetoric.
Our Take: The comments reflect both Israel and Türkiye’s tenuous ties and Erdoğan’s difficult domestic political situation. Türkiye has always sought to balance its relationship with Israel between cordial cooperation on the global stage (Türkiye is Israel’s fifth-largest exporter, and Türkiye has important relationships with staunch allies of Israel), and vocal support for Palestine to satisfy its majority Muslim population. Erdoğan has hardened Türkiye’s stance towards Israel since the outbreak of the most recent conflict (in May banning all trade activity with Israel), but it is unclear if Erdoğan’s most recent comments reflect real plans (which could constitute a dramatic regional escalation) or simply rhetoric aimed at mollifying his shrinking base.
Read More: New York Times [paywall], Washington Institute for Near East Peace
Americas: Venezuela’s Maduro wins reelection in polls widely dubbed “deeply flawed”
Autocratic Venezuelan President Maduro was formally declared the victor of Venezuela’s hotly contested presidential elections, a result immediately disputed by the country’s opposition, who had seen enormous support this cycle and had been optimistic that they may unseat the authoritarian leader.
Our Take: The election results were immediately disputed by the opposition party, which had been seen with a commanding lead in most opinion polls ahead of the votes, and international leaders, including President Biden, denounced the election results as “deeply flawed.” China and Cuba, on the other hand, congratulated Maduro. The result – for critics a foregone conclusion – cements Maduro’s control over the country and ensures that it will continue to drift toward the anti-Western bloc headed by China and Russia in his third term.
Read More: New York Times [paywall], Washington Post [paywall], Atlantic Council
Asia-Pacific: Tokyo and Washington take defense ties to next level
Japanese and US officials agreed to boost their security cooperation by upgrading the command and control of US military forces in Japan, highlighting the strategic challenge both countries face by the rising threat from China.
Our Take: The new American command will put Washington’s war fighting capabilities under the command of a headquarters on Japanese territory for the first time, while intended to maintain pace with Tokyo’s efforts to build up its military capabilities. The move intends to strengthen a common security front against China, Russia, and North Korea. However, it remains to be seen to what extent other US allies, such as the Philippines, and strategic partners, such as India and Vietnam, will follow suit.
Read More: Associated Press, CNN, Wall Street Journal [paywall]
Africa: South Africa’s ANC expels former president Jacob Zuma
The African National Congress (ANC) on Monday announced the expulsion of former South African President Jacob Zuma after he backed a rival party in May’s parliamentary election.
Our Take: Zuma had been suspended from the ANC in January after announcing he would support the uMkhonto we Sizwe (MK) party, which performed better than expected electorally, a major factor in the ANC’s loss of its majority for the first time since the apartheid era. Given that Zuma still holds substantial support among the ANC’s voting base, his expulsion from the party is likely to strengthen its internal divisions. At the same time, it raises doubts that the ANC can successfully mitigate South Africa’s burgeoning economic issues and social divide.
Read More: Reuters, New York Times [paywall], Al Jazeera
Trade and Compliance: New UK government to restart trade talks with India, the GCC and others
The UK’s new Labour-led government announced that it will begin trade talks with India, the Gulf Cooperation Council (GCC), Israel, South Korea, Switzerland, and Turkey, building upon negotiations that started during the Boris Johnson-led Conservative government.
Our Take: The UK economy has been in a state of uncertainty over the past few years, and the government’s aim to give British businesses access to strong economic growth in India and the GCC in particular presents considerable prospects for the country to shift course. However, these current initiatives notably excluded the US, spelling uncertainty over how the new UK government will navigate larger political and security considerations in its trade policy aims. Given this, the decision may signify London’s attempts to reassert strategic autonomy in its diplomatic and trade policies, diverging in certain areas from actions taken by Washington or Brussels.
Read More: Financial Times [paywall], The Hindu [paywall], GOV.UK
Climate Change: Risks of rising sea temperatures
A leading NOAA scientist is warning that the world’s oceans are registering record temperatures, which is contributing to extreme heat in the Northern Hemisphere.
Our Take: Scientists are tracking marine heatwaves from 1,300 weather observation stations around the globe, and the warning lights are flashing. June marked 15straight months of record-breaking ocean warmth, according to Copernicus Climate Change Service. Marine heatwaves have wide-ranging impacts, from stressing marine life and declining fish populations, to intensifying hurricanes. The risks spread across the fishing industry to the housing sector and beyond. Ocean-based climate solutions also offer some good news. Oceans store nearly one-third of CO2emissions produced, and technology focused on ocean carbon removal is moving from the drawing board to commercial-scale plants.
Read More: Axios, US National Oceanic and Atmospheric Administration, Copernicus, Wall Street Journal [paywall]
ESG: ESG-related proxy voting a mixed picture in 2024, reflecting continued politicization
A new review of Q1 and 2 shareholder proposals found that those related to ESG (both pro and anti) have soared to 998, already surpassing last year’s total of 947. However, support remains inconsistent, with governance the most consistently supported area.
Our Take: ESG-related proxy voting has been a hot topic for boards, as recent years have seen increasing politicization of ESG matters. Many money managers have publicly walked back rhetorical commitments to ESG-related policies, although some areas of ESG remain quietly popular. For example, Georgeson’s Early Proxy Season Review reveals that governance-related ESG proposals increased by 18% and saw rising support, while environmental and social proposals fell slightly.
Read More: ESG News, The Wall Street Journal [paywall], Morningstar
