Overview
What We’re Watching Today is 1,535 words and a 10-minute read.
Global: Massive Russian drone assault in Ukraine; drones changing the battlefield
Ukraine repelled a massive long-range drone attack launched by Russia overnight, primarily targeting Kyiv and the surrounding regions.
Our Take: Small, relatively inexpensive, some costing as little as $500, drones are reshaping the modern battlefield. They have ranges from 5 to 20km, and are controlled remotely by solders on computers, increasing using AI to select targets. Past wars were shaped by combatants establishing air superiority; with drones dominating the skies above the forces fighting in Ukraine, air superiority is a race to be won by the side that can develop and deploy drones expeditiously, with the most advanced AI-enhanced platforms.
Read More: Reuters, Reuters, War on the Rocks, The Economist [paywall]
Europe: Eurozone economy’s lackluster growth; clouded outlook for 2024
The eurozone’s economy grew by 0.3% in the second quarter, slightly outperforming expectations, but consumer confidence remains negative, clouding the outlook for the remainder of 2024.
Our Take: The Eurozone has rebounded slower than the US since the pandemic. European economic recovery has been negatively impacted by surging energy prices after Russia’s invasion of Ukraine, disruption of trade routes and supply chains, plus the negative impact of zombie companies kept afloat through pandemic-era subsidies, inflation and high levels of debt. Germany, which has served as Europe’s post-World War II economic engine, is struggling, dragging down the rest of the bloc. On the positive side, inflation is cooling and the European Central Bank is on track to consider rate cuts.
Read More: Reuters, ING Think, EU Economic Outlook
Middle East: Strikes on Hamas and Hizballah leaders raise risks of regional escalation, again
Iran and Hamas pledged to avenge the death of Hamas’ political leader Ismail Haniyeh, who resides in Qatar, who was killed in Tehran early today. Haniyeh, considered to be the chief political leader of Hamas, had been attending the inauguration of Iran’s new president.
Our Take: The killing marks the highest-ranking death of a Hamas political official since the onset of hostilities on October 7, and comes just hours after Israel announced that it had killed a senior Hizballah leader in Beirut in retaliation for a presumable Hizballah strike on a soccer field in the Golan Heights which killed 12 children. Both deaths (if Haniyeh’s death was indeed carried out by Israel) mark a significant escalation in regional conflict, and could draw both Iran and Lebanon more openly into the war. Analysts have argued that both Iran and Hizballah are not interested in – nor can easily afford– more sustained regional warfare, but political considerations may demand retaliation. Further, the elimination of Haniyeh, one of Hamas’ strongest voices advocating for a ceasefire, could harden Hamas’ position towards Israel, further complicating already fraught ceasefire talks.
Read More: Washington Post [paywall], The Economist [paywall]
Americas: Post-election violence escalates in Venezuela
Over 15 people were reported dead by opposition sources in clashes with police as Venezuelan President Maduro has met protests against his disputed election win with force.
Our Take: The nationwide anti-Maduro protests come as a wave of international organizations and countries have condemned Maduro’s election claim, and called for Maduro to release voter tallies and further clarify the results of polls that observers have assessed were not free or fair. While post-election violence is not unheard of in Venezuela, voters saw the most recent election as their first real chance since Maduro’s initial election in 2013 to unseat the leftist autocrat. The last ten years have shown that sanctions, economic isolation and even threats of invasion have been insufficient to unseat Maduro. Protests may continue to escalate as desperate Venezuelans stay in the streets.
Read More: Washington Post [paywall], Newsweek, Bloomberg Law
Asia-Pacific: Myanmar junta extends emergency amid intensifying conflict
Myanmar’s military government on Wednesday extended a state of emergency for six more months, as the junta struggles to maintain its hold on power while fighting flares up on multiple fronts and the economy remains in crisis.
Our Take: The junta’s move comes as resistance forces in the country have made stunning territorial gains, prompting countries such as China, the US, Thailand, and Japan to pressure the Burmese military regime to hold elections. Myanmar’s junta has promised to hold a multi-party election in 2025, though has reneged on similar promises in the past, and the extension of emergency rule is unlikely to prevent the conflict from further intensifying. Yet, with a worsening civil war, the concern of outside parties highlights fears that the junta could lose control of the country to rebel groups, with a peaceful transfer of power uncertain.
Read More: Associated Press, Nikkei Asia [paywall], Wilson Center
Africa: Nigerian authorities fear planned nationwide protests could become ugly
As Nigerians are planning nationwide protests against the country’s worst cost of living crisis in a generation, authorities fear a repeat of recent past flareups in violence, such as the deadly 2020 demonstrations against police brutality.
Our Take: While Nigerian authorities have touted positive factors, such as the nation’s status as a top African oil exporter, politicians and lawmakers are often accused of corruption at the expense of taxpayers. Compounding tensions that have been simultaneously exacerbated by external economic pressures, the stakes are high for any potential destabilization of Africa’s most populous country that could risk snowballing into social unrest throughout the continent. How the government responds to the planned demonstrations will be key, as an excessive crackdown could risk spiraling public discontent into a protracted, violent conflict.
Read More: Associated Press, Council on Foreign Relations
Trade and Compliance: New US rule on foreign chip equipment to China exempts some allies
The Biden administration plans to reveal a new rule next month expanding Washington’s ability to stop exports of semiconductor manufacturing equipment from certain foreign countries to Chinese chipmakers, though shipments from allies, including Japan, the Netherlands, and South Korea, will be excluded.
Our Take: The semiconductor export rule’s exemption of certain US allies reflects strategic divergences that Washington ultimately found itself needing to acknowledge to build a successful multilateral coalition on restricting Beijing’s access to advanced technologies. Yet, experts have noted that the rule is an initial step, with the exemptions intended to be temporary, raising risks that the issue of divergences between the US and its partners on the matter may simply be kicked down the road with this move. Washington will find that continuous engagement with allies will be required to address the latter’s economic priorities to convince them to follow the US lead on restricting China’s access to advanced semiconductor chips.
Read More: Reuters, Center for Strategic and International Studies
Disruptive Technology: Brazil reveals $4 billion AI investment strategy
On Tuesday, Brazil’s government announced a $4.07 billion investment plan focused on advancing sustainable and socially-driven AI technologies.
Our Take: Brazil’s notable AI investment plan highlights the country’s goal to achieve technological autonomy and competitiveness in the AI sector, enabling it to avoid dependence on imported AI tools from other countries. The success of the move could propel Brazil to become a regional leader in the AI, a major feat thus far for a country in Latin America. However, the plan is still in its initial stages and political polarization, which has been substantial in recent years, could complicate the country’s long-term AI strategy.
Read More: Reuters, BNamericas [paywall]
Climate: Heatwaves in Europe fuel wildfires; mounting costs of climate change
Wildfires are raging in eastern Spain, with alerts in force for most of the rest of the country.
Our Take: Beyond Spain, wildfires are burning in the Balkans and Greece, as suffocating heatwaves turn forests and grazing land into tinderboxes. German insurance company Munich Re issued yet another warning from the industry, with their half-year report on natural catastrophes. According to Munich Re, total loses from natural disasters last year were $120 billion from January to June 2024, slightly down from the $120 billion from the same period in 2023, but above 10-year and 30-year trends. Fires, hurricanes and other extreme weather-fueled catastrophes are causing measurable economic losses. At risk sectors, such as infrastructure and agriculture, will need to invest in risk assessment and mitigation strategies as the cost of insurance escalates or policies simply become unavailable.
Read More: Reuters, Swiss Re, European Environment Agency
ESG: SBTi walks back carbon credit approval, attempting to forestall debate about the controversial carbon offsets
The Science Based Targets initiative (SBTi), the world’s leading referee on corporate net-zero targets, appeared to walk back the effectiveness of carbon credits, saying that studies found them to be largely ineffective but leaving open the possibility of allowing companies to use credits in efforts to reduce emissions.
Our Take: The statements come a few months after SBTi made a surprise announcement that it would consider the use of carbon credits to offset Scope 3 emissions, sparking a debate among businesses – who welcome another way to control hard-to-measure Scope 3 emissions – and environmental organizations, which have condemned carbon credits as mere “greenwashing.” Last month, SBTi’s CEO Luiz Amaral, who had advocated for credits, resigned. The voluntary carbon market surpassed $2.4bn last year and could exceed $1trn by 2050, if companies move towards a widespread adoption of credits to put their net zero strategies into action, and demand for them becomes inelastic, according to BloombergNEF. In contrast, if concerns about the integrity of carbon credits are not overcome and demand remains elastic, BloombergNEW predicts that the carbon credit market could reach some $34bn by 2050.
Read More: Wall Street Journal Pro [paywall], Net Zero Investor
