Good morning, and welcome to the Global Situation Report for Friday, 7 July 2023.
- FIRST UP: Zelensky uses visit to Czech Republic to demand U.S. long-range weapons.
- Ukraine President Volodymyr Zelensky said Ukraine needs long-range weapons to strike Russian forces, without which Ukraine cannot conduct offensive or defensive operations.
- Zelensky was visiting Prague to drum up support for a NATO membership and European Union accession prior to the NATO Vilnius Summit next week.
Why It Matters: Zelensky turned a joint press conference with Czech Prime Minister Petr Fiala into a fundraising event in Prague on Friday. Ukraine’s counteroffensive has effectively stalled on complaints from Zelensky that a lack of Western weapons is to blame for Ukraine’s mediocre performance. Western military advisors have reported that Ukrainian leadership frittered away Western-provided armor on pointless, uncoordinated attacks which failed to penetrate Russian defensive positions. The continual clamor for more money and weapons by Kiev will eventually reach an unsustainable level since Western nations do not have the money nor the industrial capacity to meet Kiev’s demands. – M.M.
- NICARAGUAN SECURITY FORCES BEAT CATHOLIC PRIESTS: Nicaraguan President Daniel Ortega’s five-year campaign against the Catholic church has escalated to intimidation and beating of clergy.
- Clergy members reported a sharp uptick in surveillance by security services and citizen informants; police beatings; arrests and expulsions of priests and nuns, as well as seizures of church-owned properties.
- In February, Bishop Alvarez, a critic of Ortega’s, was convicted of treason, stripped of his citizenship, and sentenced to 26 years in prison for treason without a trial.
Why It Matters: The persecution of Catholics and Catholic clergy in Nicaragua follows a theme of authoritarian governments using their security services to target religious groups. Despite interventions by the Vatican and Mexican government, Nicaragua’s persecution of Christians, particularly conservative Catholics, appears unrestrained and reaching extreme levels. – M.M.
- CHINA BULLYING NEIGHBORS AGAIN: The Philippine government denounced China for deploying over 48 ships from its naval militia to harass Philippine fishing vessels and occupy Iroquois Reef in the Philippine Economic Exclusive Zone (EEZ).
- The reef sits over the top of extensive oil and gas reserves.
- China’s actions follow an incident at the Philppine’s Second Thomas Shoal earlier this week when Chinese naval and coast guard vessels attempted to block Philippine coast guard ships conducting a resupply of a Philippine Marine Corps outpost at the shoal.
Why It Matters: Iroquois Reef is located 148 miles west of the Philippine Island of Palawan and lies within Manila’s United Nations-recognized 200-mile EEZ. China is likely attempting to push the Philippines out of the Iroquois Reef in order to begin oil and gas extraction operations. China used the same tactics against Vietnam in the Paracel Islands, where it then built a large naval base. Expect China to continue gray zone activity with its naval militia backed up by coast guard and navy warships until Manila is able, or willing, to stand up to Beijing’s bullying. – M.M.
- MEXICO FOR THE WIN: Mexican inflation fell in June continuing a five-month streak bringing headline inflation to 5.04%.
- Inflation numbers are the lowest they have been since March of 2021.
- The Bank of Mexico held benchmark interest rates steady for the second month in a row at 11.25%.
Why It Matters: Developing nations like Mexico have taken a major hit over U.S.-Fed-driven inflationary pressures. Bank of Mexico officials, along with Mexico’s finance ministry, decided in May to decouple interest rate hikes from the U.S.-Fed, which appears to have worked to Mexico’s benefit. Mexico’s small victory may signal hope and an alternative path forward for other developing nations. – M.M.
- INDIA ECONOMY IS HOT: India sharply increased Airbus orders in June to a total of 1,044 net orders in the first half of the year.
- Airbus officially booked orders for 500 jets from budget carrier IndiGo and 250 from Air India.
- India air carriers also placed orders for 200 jets from Boeing this past month.
Why It Matters: India is struggling to fill its air carrier requirements for jets in an industry that is rapidly growing. India’s GDP growth stands at a healthy 6.9% for 2022/23, five times higher than the U.S. and 1.5% higher than China. While the West is looking at a recession in North America and Europe, India’s numbers show the opposite and that recovery is possible with sound economic fundamentals. Expect to see growing opportunities for Western investors, particularly since India has severely restricted Chinese investments as part of a broad decoupling program. – M.M.
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