Good morning, and welcome to the Global Situation Report for Monday, 26 June 2023.
- FIRST UP: Brazil to push total de-dollarization for BRICS
- Brazilian President Luiz Inacio Lula da Silva over the weekend said that he would use August’s BRICS summit to push his de-dollarization agenda. He questioned why smaller countries were forced to buy dollars for international trade. [READ MORE]
Why It Matters: There is no perfect solution for BRICS countries. They either navigate the whims of the Federal Reserve’s monetary policy, or experience greater friction and potentially higher costs with local currency trade. There’s also the question of credit availability and whether BRICS central banks or New Development Bank have the capital and credit markets to sustain non-USD bilateral trade.
- TANK COUNTRY: Poland wants to become Europe’s tank hub
- In addition to more than doubling their fleet of M1 Abrams tanks, Poland wants to become the service hub for Europe’s Abrams tanks.
- Poland fields 116 Abrams tanks and is awaiting the delivery of 250 additional M1A2 versions. [READ MORE]
Why It Matters: U.S. preparation for a conventional war with Russia goes back to at least 2017, when the U.S. Army transitioned a mechanized brigade into a heavy armor brigade, and then announced additional rotational forces to Poland, which had proposed to host a new U.S. Army base. Poland announced it will become a continental service center for Leopard 2 tanks, and is also working with South Korea to develop a wheeled armored vehicle.
- NEUTRALITY: U.S., EU court Central Asia
- U.S. and European Union have courted increased economic cooperation with Kazakhstan and Uzbekistan this year.
- EU officials recently announced a bump in oil purchases from Kazakhstan, while Uzbekistan announced U.S. readiness for increased foreign direct investment following a meeting with State Department officials.
Why It Matters: Central Asia is in a three-way tug of war between the West, Russia, and China. Chinese President Xi Jinping met with the region’s leaders earlier this year, where Kazakh President Tokayev pledged “full-scale [economic] cooperation” with China. Kazakhstan, Uzbekistan, and other regional countries seem to be more inclined to choose economic benefits than choose sides, at least for now. The U.S. wins by pushing neutrality in Central Asia, if nothing else.
- DONATION: Denmark to retire F-16s by 2025
- Danish defense officials said they may retire their fleet of F-16 jets by 2025 – two years earlier than previously planned due to a quicker delivery of F-35s. [READ MORE]
Why It Matters: Denmark is mulling an F-16 donation to Ukraine, but probably not before 2025. The quicker-than-expected delivery of F-35s may be the Biden administration’s way of pushing other NATO countries to donate F-16s to Ukraine so the United States can, too. Biden did the same thing with tanks, initially objecting then deciding to send Abrams tanks once other European countries said they’d donate armor units, as well.
- NATO: Germany to send troops to Lithuania
- Germany announced the deployment of 4,000 troops to Lithuania to bolster defenses against potential Russian and Belarusian incursions.
- Germany has had problems with military readiness and allocating funds to sustain its military.
- The German Army has a battalion-sized unit currently in Lithuania.
Why It Matters: For years Germany has neglected spending on its military and recent estimates are that it does not have a combat-capable brigade-sized unit. Promising a combat brigade to defend Lithuania likely means Germany will embark on some level of increased defense spending some of which may be on U.S.-made armaments. – M.M.
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.