Good morning, and welcome to the Global Situation Report for Friday, 05 January 2024.
- BOFA: THE GLOBAL ERA OF PERMACRISIS, POLYCRISES: From World Economic Forum data, Bank of America analysts noted the top global risks based on the degree of impact and the number of respondents concerned about these risks.
- The three highest-impact, most cited risks, in order, are an energy supply crisis, cost-of-living crisis, and rising inflation.
- Cyberattacks on critical infrastructure, a food supply crisis, and disruption in the global supply chain for goods other than food all received mid-impact rankings, while a debt crisis was lower in both impact and the share of respondents.
Why It Matters: BofA correctly concluded that “[rapid] change brings new threats, and it’s no surprise that against this unsettling backdrop, people are craving stability, safety, and security.” Business and consumer demand will create opportunities and could boost sectors like AgTech that can tackle food insecurity, building/workplace physical safety solutions, and cyber insurance – which could see market premiums triple by 2027, according to BofA’s estimates. – H.B.
- FEEDING FRIENDS: THE TAIWAN-PHILIPPINES RICE CONNECTION: Taiwan is donating 40,000 metric tons of rice to the Philippines throughout January. The first thousand tons arrived just before Christmas.
- Taiwan’s Economic and Cultural Office in the Philippines, its unofficial embassy, is also donating 2,000 metric tons of rice to the Department of Social and Welfare Development to enhance food security for the poorest Filipinos.
- This is about 7.5% of the Philippine’s yearly rice imports.
- Rice is also a primary driver of inflation in the Philippines as Filipinos consume about 36,000 metric tons per day, according to the state-run Philippine News Agency.
Why It Matters: Taiwan is steadily making one of our treaty allies dependent on it for food and economic security. An increased food dependency combined with potential regional instability makes it more likely that the Philippines will come to Taiwan’s aid if China decides to retake Taiwan by force. If the U.S. fails to come to the aid of a treaty ally and a “fellow liberal democracy,” it would signal a supreme weakness on the world stage, potentially shaking international faith in the dollar as our hegemony wanes. – J.V.
- HOUTHI EXPLOSIVE USV HERALDS DRONE WARFARE EXPANSION: An Unmanned Surface Vessel (USV) launched from Yemen exploded “within a couple of miles” of U.S. Navy and merchant ships, according to U.S. Naval Forces Central Command Vice Admiral Brad Cooper.
- “I would better characterize it as a low-profile unmanned surface vessel, not the saildrone that you may have seen,” he said.
Why It Matters: Houthis previously used a remote-controlled explosive boat, but this is the first use of modern USVs. With the explosion happening inside of a crowded shipping lane but miles from any possible targets, I think this is a warning shot by the Houthis. The U.S. Navy trains extensively against speedboat swarms but can still be easily overwhelmed in a crowded environment. Additionally, low-profile USVs are much harder to detect than normal speedboats. The Houthis could score a major PR victory if they successfully bomb an American vessel, even if they don’t sink it. – J.V.
- NORTH KOREA FIRES ARTILLERY TOWARD SOUTH KOREAN ISLAND: North Korea fired 200 shells into a maritime buffer zone just north of Yeonpyeong, a South Korean island.
- South Korea ordered an evacuation in anticipation of a North Korean attack.
- South Korean Marines conducted an artillery counterfire and were an “overwhelming operational response,” according to South Korea’s Defence Ministry.
Why It Matters: Tensions between the Koreas have been skyrocketing as Kim Jong Un announced recently that he no longer seeks reunification. The Koreas are turning into another potential flashpoint for a Western Pacific war in 2024. However, as North Korea no longer seeks reunification under Kim, there is a slim chance they’re open to a two-state solution instead of mutual destruction. – J.V.
THAT’S A WRAP: This does it for today’s edition. Thank you for reading. If you know folks who would also like to receive this email, would you please forward it to them? We appreciate you spreading the word. – M.S.