Global SITREP for Friday, 11 August 2023 – Forward Observer

Global SITREP for Friday, 11 August 2023

Good morning, and welcome to the Global Situation Report for Friday, 11 August 2023

  1. FIRST UP: Biden says China economy “a ticking time bomb”
  • U.S. President Joe Biden said the Chinese economy was a “ticking time bomb” in off-the-cuff remarks yesterday.
  • Biden responded to economic news coming out of China, where leaders have urged journalists to report that the economy is “evolving” instead of being under duress.
  • “That’s not good because when bad folks have problems, they do bad things,” Biden said of China’s slowing economic growth.

Why It Matters: China’s economic growth has slowed from a reported 8% last year to a projected 5% this year, and some analysts say even that number will be downward revised to as low as 2%. We’ve long pointed out the risk of a 2008-esque financial crisis in China, and Biden alluded to the country’s “ticking time bomb” of debt problems. The country escaped a major financial crisis and prevented financial contagion with the $81 billion collapse of Evergrande, but we expect further debt defaults that could pose a global risk. – M.S.

  1. MEXICO: Critics warn of political assassinations in Mexico
  • Jesús Zambrano, leader of the progressive Party of Democratic Revolution (Partido de la Revolución Democrática; PRD), warned President Andres Manuel Lopez Obrador (AMLO) that continued attacks against his political opponents would lead to assassination attempts.
  • “The president has the responsibility to protect all of society, and particularly now in this scenario of political tension, of confrontation. Mr. López Obrador has the obligation to cease the harassment and political persecution against his opponents, because he is sowing the field so that tomorrow there could be things like what happened in Ecuador,” Zambrano said.

Why It Matters: The assassination of a right wing presidential candidate in Ecuador has renewed fears over the long history of political violence in Mexico. In previous election cycles, we’ve seen mass violence targeting politicians. Nearly 90 politicians were assassinated in the lead-up to the 2021 midterms, for instance. While AMLO says that he will refrain from violating Mexican law with verbal attacks against political rivals, he continues to obliquely mention likely opposition presidential candidate Xóchitl Gálvez. Meanwhile, AMLO denied accusations that Mexico’s Sinaloa Cartel was involved in the death of Ecuadorian presidential candidate Fernando Villavicencio. – M.S.

  1. SOUTHCOM: China on the ‘20-yard line’ of U.S. homeland
  • U.S. Southern Command’s (SOUTHCOM) General Laura Richardson said that China’s creeping influence in Latin America puts the country “on the 20-yard line to our homeland,” or to put it differently, “they’re on the first or second island chain to our homeland.”
  • Richardson said that China has not yet established a military base in the region yet, but “with all of this critical infrastructure investment with BRI [Belt and Road Initiative] projects that there could possibly be some someday.”

Why It Matters: Richardson’s concern is that Chinese investment into port and other critical infrastructure facilities are deemed “dual use,” allowing China to transition the facilities from civilian to military capacity in short order. Richard also said that the U.S. is not in a position to compete with China on infrastructure projects and called for the U.S. government to provide “alternative methods, alternative companies, [and] alternative options” for Latin America. – M.S.

  1. FALLING EXPORTS: India’s rice export ban fuels follow-on fears
  • The Indian government last month announced export bans of non-Basmati rice, which led to temporary panic buying in the United States.
  • Some analysts are now concerned that resulting higher prices will lead other rice-exporting countries to curb exports to decrease domestic prices.

Why It Matters: India accounts for about 40% of global rice exports, so availability issues will be significant. Global prices for the grain were already at three-year highs before the ban. This could be the front edge of another round of resource nationalism and protectionist policies. We go into further detail on food price inflation – and why U.S. food prices should continue to rise – in this morning’s Early Warning brief. You can get access to our latest early warning indicators for disruption and disaster here:

  1. THE NORTH: Russia launches Northern Fleet exercises
  • The Russian Ministry of Defense announced the start of a Northern Fleet naval exercise in the Northern Sea Route (NSR), a long stretch of water that runs along Russia’s Arctic coast.
  • The exercise will include 8,000 personnel, dozens of naval vessels, and up to 50 combat, special operations, and support units, according to the press release.

Why It Matters: Russian efforts to militarize the Arctic started nearly a decade ago. By 2015, the Russians had completed ten new airfields, six new military bases, and added dozens of icebreakers to its Northern Fleet. By 2016, Russia had added four new brigade combat teams permanently deployed to the region. Russian officials have repeatedly said they view the Arctic as a military avenue of approach to the United States. – M.S.

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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.

Mike Shelby is a former Intelligence NCO and contractor. He's now the CEO of Forward Observer.

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