Good morning. Here’s your Daily SITREP for Thursday, 31 August 2023.
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TODAY’S BRIEFING:
- READ TIME: 5 Minutes, 24 Seconds
- Inside the Beltway
- (1) House GOP Moving for Biden Impeachment Without a Vote
- (2) Hutchinson: GOP Risking Trump Ballot Disqualification
- Domestic INTSUM
- (3) Federal Reserve Issues Warnings to Regional Banks
- (4) Pilots and Flight Attendants Unions Plan National Picket
- Global SITREP
- (5) Sirens Blaring for China’s Property Market
- (6) Russia Teams Up With Turkey and Qatar for New Grain Deal
- (7) African Union Announces Joint Naval Exercise With China in 2024
- (8) Russia and North Korea Advance Arms Deals
- (9) China’s 40-Hour Anti-Sub Drill, A Peak Into Chinese Insecurities
- (10) Chinese Rails in Algeria: A Cornerstone to Unseating the West
INSIDE THE BELTWAY
- (1) HOUSE GOP MOVING FOR BIDEN IMPEACHMENT WITHOUT A VOTE: House Speaker Kevin McCarthy (R-CA) and House Republicans are considering a strategy to impeach President Biden without holding a formal House vote, a similar strategy former Speaker Nancy Pelosi (D-CA) used to impeach former President Donald Trump.
- A House GOP aide said there was “no way” Republicans would get the 218 votes required, and Republicans in districts won by Biden in 2020 are privately concerned about the impact impeachment will have on their reelection.
- McCarthy ally Rep. Darrell Issa (R-CA) said the goal of the coming inquiry isn’t impeachment but could end in a criminal referral against President Biden to the Justice Department.
- Why It Matters: McCarthy signaled that an official impeachment inquiry was coming when the House returned from its August recess. A conviction in the Democrat-controlled Senate is unlikely. With nearly 50% of Democrats believing Biden is too old to run for reelection and “Bidenomics” leading to higher inflation and a recession next year, it’s possible that Biden will withdraw from reelection in 2024. – R.C.
- (2) HUTCHINSON: GOP RISKING TRUMP BALLOT DISQUALIFICATION: During an interview with Bloomberg Radio, former Arkansas Governor and Republican primary candidate Asa Hutchinson said the Republican Party and voters are taking the risk that Democratic Secretaries of State could bar former President Trump from their 2024 ballots.
- Trump campaign spokesman Steven Cheung said there was no legal basis to remove Trump from the 2024 ballot “except in the minds of those pushing it,” and they are “stretching the law beyond recognition” for political purposes.
- Arizona Secretary of State Adrian Fontes said his office is taking challenges to disqualify Trump “very seriously,” and while he is not taking a position, advocates on both sides need to “come out swinging.”
- Why It Matters: Activist groups like Free Speech For People, which describes itself as non-partisan, sent letters to Secretaries of State in New Hampshire, Arizona, New Mexico, and Florida urging state governments to bar former President Trump from their ballots for 2024. The 14th Amendment argument that Trump is disqualified from running for President is picking up steam in the media and with activists. As Trump’s GOP polling lead continues to grow, more Democrats will adopt the 14th Amendment argument for disqualification. – R.C.
DOMESTIC INTSUM
- (3) FEDERAL RESERVE ISSUES WARNINGS TO REGIONAL BANKS: The Federal Reserve sent notices to regional banks on Wednesday, demanding corrective action to their capital levels, liquidity, and compliance.
- Regional banks with $100-$250 billion in capital – including Citizens Financial, Fifth Third Bancorp, and M&T Bank – received the warnings as part of an effort to tighten supervision.
- Why It Matters: Fed Chair Jerome Powell has made it clear that their interest rate policy is “higher for longer” than markets are expecting. These warnings to regional banks may be the Fed signaling additional interest rate hikes, which would buy banks time to shore up their balance sheets. – H.B.
- (4) PILOTS AND FLIGHT ATTENDANTS UNIONS PLAN NATIONAL PICKET: The Southwest Airlines Pilots Association (SWAPA) and the Association of Professional Flight Attendants union members announced a nationwide picket starting today over contract disputes with airlines.
- The SWAPA said it will hold its “first ever” informational picket at Baltimore Washington, LA International, Hartsfield Jackson International, Houston Hobby, and Chicago Midway airports.
- Why It Matters: The Southwest and flight attendants’ unions voted to authorize strikes and said they will strike once the National Mediation Board releases them from negotiations. A strike could cause disruptions going into the holiday travel season. – R.C.
Global SITREP
- (5) SIRENS BLARING FOR CHINA’S PROPERTY MARKET: Country Garden, China’s largest private property developer, just reported a semi-annual loss of $6.7 billion, its second consecutive losing period (~$920 million in the second half of 2022).
- Country Garden has missed $22.5 million of bond payments and is warning of a default if its financial performance gets worse.
- Offshore creditors are considering legal action if Country Garden tries to restructure its debt.
- Why It Matters: Country Garden’s financial troubles reveal a distressed Chinese property market. Beijing is taking steps to revive the market, including easier access to mortgages for first-time homebuyers and potentially lower mortgage rates offered by state-owned banks. But these measures reek of desperation and may increase global concerns about the Chinese economy. Developer defaults could spark a Chinese banking and financial crisis that may spread around the world. – H.B.
- (6) RUSSIA TEAMS UP WITH TURKEY AND QATAR FOR NEW GRAIN DEAL: Wednesday, Russian Foreign Ministry officials announced a new initiative with Turkey to move Russian grain to the global market.
- Russian Foreign Minister Sergei Lavrov will reportedly discuss the plan during a meeting with Turkish officials later this week.
- The plan, financially backed by Qatar, provides heavily discounted Russian grain to Turkey, who then transports it to countries most in need.
- Why It Matters: This new deal appears to be a substitute for the Black Sea grain deal that was terminated in July. Russia is likely responding to requests from African countries facing food insecurity over the lack of Ukrainian grain available on the world market. Coincidentally, the U.S. announced it was working with Romania to double the movement of Ukrainian grain to market via the Danube River. Both efforts combined could end up stabilizing global grain availability. – M.M.
- (7) AFRICAN UNION ANNOUNCES JOINT NAVAL EXERCISE WITH CHINA IN 2024: African Union officials at the annual China-Africa Forum announced a joint naval exercise with China scheduled for 2024.
- Why It Matters: Very few African nations have notable navies, and the ones that do are on key strategic points: Algeria near the Strait of Gibraltar, Egypt in the Suez Canal, and South Africa in the Southern Cape. – J.V.
- (8) RUSSIA AND NORTH KOREA ADVANCE ARMS DEALS: According to White House national security spokesman John Kirby, the U.S. is concerned about expanding arms and raw material trade between North Korea and Russia.
- North Korea reportedly provides artillery ammunition to Russia for use in its war against Ukraine.
- Kirby added that the arms deals violate United Nations Security Council resolutions.
- Why It Matters: Anecdotal battlefield reporting indicates North Korea has been providing Russia with various munitions, not just artillery ammunition, for use in Ukraine. The latest negotiations between Pyongyang and Moscow appear to include raw materials that would supply Russia’s defense industrial base. North Korea’s agreement to expand illicit trade with Russia is likely a result of Kim Jong Un’s pledge to increase cooperation with Moscow. – M.M.
- (9) CHINA’S 40-HOUR ANTI-SUB DRILL, A PEAK INTO CHINESE INSECURITIES: The Chinese People’s Liberation Army Navy (PLAN) just wrapped up a 40-hour naval exercise consisting of continuous anti-submarine patrols in the South China Sea.
- China cites an “infestation” of submarines from Vietnam, Malaysia, Indonesia, Japan, and the U.S. as threats to their national security.
- Why It Matters: Submarines are the greatest threat to a naval blockade that might be used to coerce Taiwanese reunification. – J.V.
- (10) CHINESE RAILS IN ALGERIA: A CORNERSTONE TO UNSEATING THE WEST: Yesterday, Algeria’s president signed a deal with China to build 6000 kilometers of railways under the Belt and Road Initiative.
- The railways will connect all Algerian cities and act as a gateway to facilitate other development in other African countries.
- Why It Matters: Algeria is strategically important as it has a respectable navy operating in the Mediterranean Sea. It is the northernmost nation in former French Africa, giving the Chinese inroads to numerous West African nations. It also has a sizable expat population living in urban France that carried out racially motivated riots this summer. All of these are pieces China can use to destabilize Western influence in their homelands and abroad. – J.V.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge
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