Daily News Brief

August 14, 2023

Top of the Agenda

The Russian ruble fell to a value of 101 to the U.S. dollar (Reuters) today, its weakest point in more than sixteen months. A spike in oil prices after Russia’s invasion of Ukraine last year caused a short-lived rise in the currency’s value, but it has now fallen about a quarter in its value against the dollar since the war began. Moscow has increased spending to fund its war effort as its economy suffers under Western sanctions.

Russia’s central bank said it could continue to raise interest rates (FT) to respond to the sliding currency and that the ruble’s decline did not present a threat to Moscow’s financial stability. However, raising interest rates could risk slowing down the country’s economy for consumers. Analysts say that Western investors’ shunning of Russia following the invasion is taking its toll.

Analysis

“The weakening of the ruble is the result of the international screws tightening around the Russian economy, but also the cost of keeping the economy going,” SEB’s Erik Meyersson tells Bloomberg.

“The breakup between Russia and the West has acquired an aura of permanence,” the Catholic University of America’s Michael Kimmage and George Washington University’s Maria Lipman write for Foreign Affairs. “No matter how long the war continues, and regardless of how it ends, it will almost certainly leave in place a crucial new reality of twenty-first-century international relations.”

This In Brief by Anshu Siripurapu and CFR’s Noah Berman looks at the effects of Western sanctions on Russia.

United States

Search operations are still underway (AP) for victims of a fire last week in the town of Lahaina, the deadliest U.S. wildfire in more than a century. A dry summer and high winds from a nearby hurricane exacerbated the destruction. Authorities have warned that toxic byproducts of the flames may remain in the city’s water, while almost every building in the town was destroyed.

CFR’s Alice C. Hill and Tess Turner explain the need to adapt to wildfires in a warming world. 

Pacific Rim

A court partially lifted the convictions (Guardian) for seven prominent pro-democracy figures for organizing an unauthorized assembly during mass protests in 2019. Their sentencing two years ago was widely seen as an unprecedented setback for Hong Kong’s democracy movement.

This Backgrounder by Lindsay Maizland explores China’s crackdown on Hong Kong’s freedoms.

China: Beijing released a twenty-four-point plan (Bloomberg) to try to attract foreign investors that includes improving visa access and offering better tax treatment. According to one Chinese indicator, foreign investment in the second quarter of 2023 had fallen (Bloomberg) to a twenty-five-year low.

For Foreign Affairs, Adam S. Posen looks at the end of China’s economic miracle.

South and Central Asia

Militants in southwest Pakistan attacked a convoy of engineers (Dawn) en route to a Chinese-financed port project. No engineers were reported dead, while Pakistani forces said that security forces killed two of the militants. Islamabad has seen an increase in attacks on Chinese civilians in Pakistan in recent years.

Afghanistan: An explosion at a hotel in the southeastern city of Khost killed at least three people (TOLOnews) and injured seven, officials said. 

Middle East and North Africa

Saudi Arabia has requested to be a partner in a joint next-generation fighter jet project involving Italy, Japan, and the United Kingdom (UK) that aims to produce a highly advanced and exportable combat aircraft by 2035, the Financial Times reported. Tokyo is reportedly firmly opposed to Riyadh’s involvement. 

Saudi Arabia/Palestinian territories: Riyadh appointed its first diplomatic envoy (NYT) to the Palestinian Authority in the West Bank amid U.S. efforts to explore Saudi-Israeli normalization.

Sub-Saharan Africa

The $55 million fund at the bank was established in 2016 but has not disbursed any money (FT) despite organizations applying for it. The bank has announced that the money should instead be managed by an external body, but has not said why it has been untouched for the last seven years. 

Niger: Hours after meeting with mediators, Niger’s military junta said that they had enough evidence to prosecute deposed President Mohamed Bazoum for “high treason.” If convicted, he could face the death penalty. The African Union is meeting today (Guardian) to discuss the coup.

Europe

During the six-day trip, Li Shangfu will give a speech (SCMP) at a Moscow security conference and visit senior military officials in Belarus. His trip to Belarus marks the first visit by a Chinese defense minister in five years.

Americas

With 90 percent of the votes counted, the far-right libertarian economist Javier Milei had 30.5 percent (Reuters) of the vote in yesterday’s mandatory primary election. The event was a preview of voter preferences ahead of October’s presidential election. The main center-right opposition coalition won 28 percent of the vote, while the ruling left-wing coalition won 27 percent. 

Ecuador: Journalist Christian Zurita will take the place (AFP) of Fernando Villavicencio, who was assassinated last week, as the presidential candidate for the Movimiento Construye party in the August 20 election.

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