Good morning, and welcome to the Global Situation Report for Wednesday, 02 August 2023.
- FIRST UP: Russia strikes Ukrainian ports on the Danube River. Halts grain shipments out of Ukraine.
- Russia struck the Danube port of Izmail with a volley of cruise missiles, hitting grain silos and office buildings.
- Global wheat prices spiked 5% after ships headed to the port dropped anchor at the mouth of the Danube, and Ukraine closed the port for operations.
Why It Matters: The second and third-order effects of failing to renew the Black Sea grain deal continue to pile up. Western media and government officials placed the blame on Moscow for potential global food insecurity following the Danube strikes; however, that appeared to be mostly propaganda. Moscow has gone direct to developing nations with food security issues and offered to provide Russian grain to offset food shortages. The death of the Black Sea grain deal looks more like another of NATO/Ukraine’s own goals. – M.M.
- ARGENTINA IN CHINA’S SIGHTS: China gained dominant leverage over Argentina with its recent debt bailouts to avert a default on IMF loans.
- China has rescued Argentina with $3 billion in currency swaps over the last 30 days to avert a default on a 2018 loan package.
- The Chinese currency swap deal with Argentina is opaque, and there is no available documentation on what Buenos Aires had to give up in exchange for the bailout.
Why It Matters: Argentina faces triple-digit inflation and is severely cash-strapped after decades of excessive spending and poor money management. China has made significant inroads into South America through Brazil and Bolivia and the “pink wave” of new socialist leaders across the continent. Argentina is now locked into China through debt diplomacy and will likely join Brazil and Bolivia as a new client state. – M.M.
- DESTINATION MONGOLIA: Mongolia signed an Open Skies civil aviation agreement with the U.S. on Wednesday.
- Open Skies agreements permit commercial air carriers to operate in each other’s countries.
- Mongolia has recently pursued a diplomatic strategy of improving relations with Japan, South Korea, and the U.S.
Why It Matters: Mongolia is between Russia and China and traditionally relies on the two neighbors to power its economy. Expanding economic ties with Northeast Asia and the U.S. could make Mongolia less dependent on Russia and China and give the U.S. a foothold between its primary political adversaries. – M.M.
- TAIWAN: WHERE’S MY F-16S?: Taiwan defense officials announced they would be forced to upgrade older Mirage 2000 fighter jets due to excessive delays in receiving U.S. F-16V fighters.
- Taiwan purchased upgrades for its 141 F-16A/B to the newer F-16V variant but faced significant delays in delivery from the U.S.
- Taiwan defense officials plan to upgrade nine of their 54 French-made Mirage 2000-5 jets with life-extension packages to cover the F-16 delayed delivery.
Why It Matters: Taiwan has suffered numerous delays in weapons and aircraft packages purchased from the U.S. and is taking precautionary steps to maintain readiness against a possible Chinese military action. Washington is clearly focused on Ukraine, and U.S. efforts to supply Ukraine with U.S.-made F-16 fighters may further delay F-16V deliveries to Taiwan. Such delays could come at a time when China appears to be moving quickly towards reunifying Taiwan with the mainland. – M.M.
- EUROPEANS EVACUATE NIGER: European nations are evacuating their citizens from Niger as rumors of war emerge following last week’s military coup.
- The 15-nation African bloc ECOWAS delivered an ultimatum to the Niger’s ruling junta to restore former President Mohamed Bazoum to office.
- Niger, along with Burkina-Faso and Mali, has said any external attempts to meddle in Niger’s internal affairs will result in war.
Why It Matters: Niger has aligned with Burkina-Faso and Mali, who also had military-driven changes in government, which saw allegiances shift from U.S. and European countries to Russia and China. It is unlikely that ECOWAS could muster the resources to follow through on its ultimatum to Niger, even with Western support. Rumors of Wagner paramilitaries in Niger have spread on social media, which, if true, could pit Western-backed ECOWAS forces against Russian/Belarusian-backed mercenaries – probably not a scenario the West is interested in pursuing. – M.M.
DON’T MISS my next Early Warning report, focusing on developments in the global balance of power. It’s released to DailySA subscribers each Friday.
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.