Good morning, and welcome to the Global Situation Report for Thursday, 18 January 2024.
- ARGENTINE PROVINCE CREATES OWN CURRENCY: The northwest Argentine province of La Rioja’s legislature approved the issuance of a provincial currency yesterday to pay public workers’ salaries after budget restrictions from President Javier Milei’s new federal government.
- The province will issue about $18 million worth of new currency units known as “chacos,” but it’s to be determined if these will be printed or just digital entries in the public workers’ bank accounts.
- “To think that during the election campaign, I was treated as crazy for postulating a system in which there was free currency competition, and now they are promoting it!” Milei wrote on Twitter/X while at the World Economic Forum.
Why It Matters: Economist Martin Armstrong forecasted that we would see the rise of local currencies again as federal governments’ debt rises and people seek an alternative. This is an emerging trend that could spread to other parts of the world in 2024. Some national currencies could even hyperinflate in the coming years, which would speed up the process of adopting state/provincial or local currencies. Also, failing foreign currencies should increase the demand for U.S. dollars. – H.B.
- IRAN-PAKISTAN-BALOCHISTAN WEEK OF CHAOS: Iran and Pakistan have exchanged missile strikes, recalled ambassadors, and increased naval presence over the past 72 hours.
- Both nations held a joint naval exercise for emergencies at sea on Tuesday, 16 January. Pakistan increased its naval presence in the Strait of Hormuz and Arabian Sea from two ships to five ships in response to attacks on shipping.
- Iran fired missiles at Jaish al-Adl, a Pakistan-based Iranian separatist group, in Balochistan, Pakistan, on Tuesday night, according to Iranian Foreign Minister Hossein Amirabdollahian at the World Economic Forum.
- On Wednesday, Pakistan expelled the Iranian ambassador in Islamabad and recalled its ambassador to Tehran in response to the strikes. The Foreign Affairs Minister promised “serious consequences” for the strikes. Pakistan fired missiles on the Balochistan Liberation Front and Liberation Army in Iran Thursday morning, according to the Foreign Ministry Spokeswoman.
- Both sides claim to respect the sovereignty and territorial integrity of their neighbors, claim to have killed only Balochi separatists, and claim that the opposite side killed only women and children.
Why It Matters: The various Balochi separatists have operated in the region for decades and are likely to ramp up attacks on both of these states in response to the strikes. Pakistan and Iran are each acting unilaterally while also no longer having ambassadors. The situation risks escalating not only along the Balochistan region but in the Strait of Hormuz and Arabian Sea as both navies operate there. This would cause enormous disruption to the global oil supply and create another hazardous area for commercial shipping. – J.V.
- JAPAN SENDING JGSDF TO TRAIN SOLOMON ISLANDS IN DEMINING: Japan is sending its Ground Self-Defense Force Explosive Ordnance Disposal (JGSDF, EOD) to the Solomon Islands to teach the National Police Force there how to demine.
- The Solomon Islands owns Guadalcanal which is estimated to have over a million unexploded shells remaining from its famous battle.
Why It Matters: The Solomon Islands signed a security agreement with China to station Chinese Police on the islands and work with the Solomon National Police Force last year. They also allowed the U.S. to open an embassy on the islands for the first time in 30 years in 2023. Japan, acting as the U.S.’ regional liaison, is likely seeking to encroach on China’s security agreement as part of the foreign policy competition over the Pacific Island “fence” around Australia. – J.V.
- TAIWAN PRESIDENT-ELECT LEAVES PRO-INDEPENDENCE FACTION: Taiwanese President-elect Lai Ching-te officially left the New Tide Faction of the Democratic Progressive Party.
- New Tide is the main pro-independence faction of the Democratic Progressive Party.
- Members of the faction welcomed Lai’s departure as a defense against accusations of partisanship.
Why It Matters: Outwardly, it looks like Lai is separating himself from the Taiwan independence movement. However, the departure message by the faction suggests the move may simply be for appearances. His most dangerous course of action would be to unilaterally declare independence with an opposing legislature, as it would likely cause an internal split and provide China with immediate cause for war. – J.V.
- AFD IN GERMANY SPARKS OUTRAGE, HEADED FOR ELECTION WIN: Members of Germany’s Alternative for Germany (AfD) party recently discussed a policy to deport millions of foreign-born German citizens, sparking protests across the country.
- AfD is expected to gain several communal election seats in June and a majority in three eastern German states in September.
- Members of Germany’s Bundestag have discussed banning AfD as a party and currently have the party under state surveillance for “extremism.”
Why It Matters: AfD’s growing influence in German politics is another example of the rising populist tide that has accelerated since 2016’s BREXIT vote and the election of former President Donald Trump. Establishment political parties around the world hope to squash alternatives that are bridging traditional political divides, and the establishment’s efforts may succeed in some countries. However, even if they are successful, the desire for real change to improve average citizens’ lives will remain, and this sentiment will drive more chaos and falling confidence in public institutions this year and beyond. – H.B.
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.