Good morning, and welcome to the Global Situation Report for Thursday, 20 July 2023.
- FIRST UP: Russia bombed the Ukrainian port of Odesa for the third straight night.
- Moscow also threatened ships in the Black Sea bound for Ukraine.
- The Chinese consulate in Odesa was damaged by Thursday’s strike.
Why It Matters: American Wheat prices are up 8% on fears of a tighter supply due to the collapse of the Black Sea grain agreement and the repeated bombings of Ukrainian ports. Russia has declared all Ukraine-bound shipping to be combatants in the war and will likely blockade or sink vessels that attempt to reach Ukraine through the Black Sea. Expect continued Russian retaliation for the Kerch Bridge attack and rising wheat product prices. – M.M.
- CHINA AND RUSSIA IN SEA OF JAPAN: China and Russia began joint naval and air exercises in the Sea of Japan on Thursday.
- Chinese state-backed media reported, “The joint exercises will test the ability of the Chinese and Russian armies to integrate joint operations in distant waters.”
- The exercises are scheduled to last until Sunday, July 23rd.
Why It Matters: The China-Russia joint naval exercises are a sign of deepening cooperation between the two countries. The location in the Sea of Japan is likely a message to Tokyo that aligning with the U.S. can have consequences, and the China-Russia alliance can reach into Japan’s home waters with little effort. – M.M.
- SWEDISH EMBASSY ATTACKED IN BAGHDAD: The Swedish embassy in Baghdad was attacked and burned by angry mobs on Thursday over a scheduled Koran burning in Sweden.
- Iraqi security forces reportedly stood by and allowed protesters to breach the embassy and set it on fire.
- Iraq expelled the Swedish ambassador on Thursday to protest the Koran burning in Stockholm.
Why It Matters: The attack on the Swedish embassy, and the follow-on burning of the facility, while Iraqi security forces watched is an indication that Iraq remains a backwater client state of Iran. Despite two decades of democracy building by the U.S. and its partners, Baghdad’s government still cannot abide by international diplomatic norms. – M.M.
- NORTH KOREA WARNS OF NUKE USE: North Korea’s defense chief warned on Thursday that the presence of a U.S. nuclear missile submarine in South Korea’s port of Busan creates the legal conditions for Pyongyang’s use of nuclear weapons.
- North Korea’s defense minister made the remarks over the recent arrival of the USS Kentucky ballistic missile submarine for a port call in Busan.
- The presence of the USS Kentucky in Busan is not a violation of South Korean or international law.
Why It Matters: North Korea, while making concerning remarks about the use of nuclear weapons, is unlikely to take any kinetic action against its neighbors or the U.S. over the presence of the USS Kentucky. Pyongyang’s latest series of threats are likely saber-rattling meant to prop up its tough-guy self-image. – M.M.
- KIEV MADE ABOUT GRAIN: Ukrainian Prime Minister Denys Shmyhal condemned Poland’s extended ban on Ukrainian grain exports as an “unfriendly and populist move” on Thursday.
- Poland said it would continue to block Ukrainian grain exports to its country to protect its local grain market from an excessive supply of Ukrainian grain.
- Five central European countries are calling for a ban on Ukrainian grain imports to be extended until the end of the year.
Why It Matters: European economies cannot absorb the anticipated massive influx of Ukrainian grain that can no longer transit the Black Sea. Excessive grain supplies in European markets would likely crush farmers who are already on tight margins over European Union climate regulations on agriculture. Ukraine’s grain export problem is largely self-inflicted as it worked hard to squash concessions for reciprocity required by Russia to sign the Black Sea grain deal. – M.M.
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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.M.