Good morning, and welcome to the Global Situation Report for Monday, 08 January 2024.
- GERMAN FARMERS KICK OFF “WEEK OF ACTION”: German farmers blocked highway access roads and city streets throughout the country with convoys of tractors today as they protested the ending of agricultural tax breaks.
- In December, German Chancellor Olaf Scholz proposed ending the diesel tax break and car tax exemption for farming vehicles to raise needed additional government revenue.
- Government officials said last Thursday the car tax exemption would remain, but the German Farmers’ Association had no confidence in the government and insisted the week-long protests would go on as planned.
Why It Matters: These protests should have an economic and political impact on both the European Union and the United States. Climate change initiatives, which are harming Germany’s agricultural and manufacturing sectors, are further along in Germany than in many parts of America. A severe German recession from these policies could lead to a continent-wide recession, more calls to break up the European Union, and capital flight to America. However, if these protests can roll back the European climate change agenda the way the Canadian trucker protest pushed back against COVID policies, this could be a model if the U.S. federal government and some states adopt similar policies. – H.B.
- CHINA SANCTIONS FIVE U.S. DEFENSE COMPANIES: China announced new sanctions on five U.S. defense contractors: BAE Systems Land and Armaments, Alliant Techsystems Operations, AeroVironment, Viasat, and Data Link Solutions.
- The sanctions will freeze any assets in China and bar people and organizations in China from dealing with them.
Why It Matters: While this may hinder the attempts to stockpile U.S. defense goods, the greatest risk to the average American comes via Alliant Techsystems, owner of the Lake City Army Ammunition Plant. Lake City is required to produce 1.6 billion small arms cartridges per year and maintains this ability by selling to the public. Any possible Chinese subcontractors could create a shortage of civilian ammunition. China can also use these sanctions postbellum to prosecute Taiwanese businesses and personnel as they lay claim to the entire island and its people. – J.V.
- INDIA SAVES HIJACKED VESSEL, PART OF GROWING PIRACY PROBLEM: Pirates hijacked MV Lila Norfolk, a Liberian-flagged tanker 450 miles off the Somali coast last week. The Indian Navy and Marine Commandos recaptured the vessel without a fight. They reported the pirates appear to have fled before their arrival.
- Fifteen Indians and six Filipinos manned the vessel despite the flagging.
- India bolstered its anti-piracy force after several attacks on Indian-manned vessels.
Why It Matters: Piracy is on the rise since the Houthis shut down the Red Sea. This is creating a more complex threat environment for international shipping that is likely to grow unless quickly stamped out. Commercial vessel trackers and the International Criminal Court Commercial Crime Services division report several piracy hotspots along the Red Sea reroute, including in the Armpit of Africa. As Operation Prosperity Guardian showed a general unwillingness to form an international force, old hotspots are likely to reignite, disrupting shipping and forcing countries to provide armed escorts along more of the shipping routes. – J.V.
Source: Marine Vessel Traffic
- COSCO CEASES DELIVERY TO ISRAEL: Israeli officials announced that the China Ocean Shipping Company (COSCO) ceased shipping to Israel with no commentary on the decision.
- China’s envoy to the UN expressed concern over shipping disruptions prior to the decision.
- Houthi leaders promised to attack all ships heading into Israel the same day as the Chinese envoy.
- China has sought a ceasefire since the beginning of the war.
Why It Matters: China’s relations with Israel have been extremely neutral for their entire existence despite the relatively close relations with Israel’s enemies. Ceasing to deliver goods under the guise of safety will have a similar effect to sanctioning Israel until they sue for peace. – J.V.
- BLINKEN MAKES PEACE PUSH IN MIDDLE EAST: U.S. Secretary of State Antony Blinken is on a tour of the Middle East to persuade Gaza’s Muslim Arab neighbors to take an increased role in peace and governance in the region.
- Blinken met with or is scheduled to meet with officials in Abu Dhabi, Jordan, Qatar, United Arab Emirates, and Saudi Arabia and is set to meet with Israeli officials tomorrow.
Why It Matters: Blinken’s meetings are focused on three outcomes. First, the U.S. wants an end to the Israeli war in Gaza, which, by all indications, will continue well into 2024. Second, Blinken wants regional powers to play a role in developing post-war governance in Gaza and an independent Palestinian state. Blinken told foreign leaders that the U.S. opposes Israel’s alleged plan to resettle Palestinians in other countries. Third, continued Houthi attacks against commercial carriers in the Red Sea are disrupting about 20% of international trade. Blinken wants regional powers to put pressure on Iran and the Houthis to end the attacks. – M.S.
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.