Daily News Brief

June 13, 2024

Top of the Agenda

Officials from Group of Seven (G7) countries have reached a preliminary deal on using future profits from frozen Russian assets to provide Ukraine with a roughly $50 billion loan, unnamed diplomats familiar with the deal told media. Leaders are discussing the agreement’s details at this year’s annual G7 summit, which kicked off today in Italy, with Ukrainian President Volodymyr Zelenskyy in attendance. The summit follows Washington’s announcement yesterday of new secondary sanctions on Russia, including measures that target Chinese companies supporting Russia’s war efforts. 

The new U.S. sanctions treat foreign financial institutions transacting with sanctioned Russian entities as if they are dealing directly with the country’s military-industrial base. Moscow financial institutions were included on a new sanctions list, and Russia’s flagship stock exchange suspended trading in dollars and euros today. The three-day G7 summit is also due to discuss the war in the Gaza Strip and global trade tensions. (AP, FT, WSJ)

Analysis

“This [deal on frozen Russian assets] is a very real achievement,” CFR expert Brad W. Setser posts. “Last year the profits on a large share of Russia’s frozen assets were going to [financial services firm] Euroclear, not Ukraine.”

“[The new U.S.] secondary sanctions are intended to expand the U.S.’s ability to pursue circumvention by actors who do not have any legal nexus with the U.S. It means the U.S. can, in effect, enforce its sanctions on people who aren’t otherwise subject to U.S. law,” the Center for New American Security’s Emily Kilcrease tells the Financial Times.

Pacific Rim

Countries in the Association of Southeast Asian Nations (ASEAN) exported more to the United States than to China in the first quarter of 2024, a positional flip-flop that last occurred six quarters ago. An economist at the Malaysian bank CIMB Group cited “both structural and cyclical” reasons for the shift, saying that trade tensions between Washington and Beijing led some U.S. firms in China to relocate to places such as Malaysia. (Nikkei)  

This Backgrounder explores ASEAN's goals.

China/New Zealand: The countries agreed that New Zealanders will have visa-free access to China while China will expand language teaching and cultural exchanges in New Zealand, Chinese Premier Li Qiang said on a visit to Wellington today. New Zealand Prime Minister Christopher Luxon said he raised issues including human rights and foreign interference in their meeting. (Reuters) 

South and Central Asia

Demonstrators outside Armenia’s parliament clashed with security forces yesterday. The protesters called for Armenia’s prime minister to step down and voiced opposition to a peace deal that follows an Azerbaijani military operation that reclaimed an ethnic Armenian enclave in the country last year. (Reuters, RFE/RL)

Bangladesh: A court indicted Nobel prizewinning economist Muhammad Yunus in an embezzlement case yesterday. Yunus denied any wrongdoing and said he was being harassed by authorities. His supporters have said in the past that separate charges against him were due to poor relations with the Bangladeshi government, which the government has also denied. (AP)

Middle East and North Africa

Lebanese General Joseph Aoun met with senior U.S. officials and lawmakers this week in his first visit to Washington since February 2023, Al-Monitor reported. The United States wants to prevent a war between Lebanese militant group Hezbollah and Israel, though hostile exchanges between the two are mounting. Yesterday, Hezbollah launched around 215 rockets toward Israel in retaliation for a previous Israeli operation that killed one of Hezbollah’s senior commanders. One U.S. strategy is looking at supporting Lebanon’s military to contain Hezbollah. 

This In Brief by CFR’s Christina Bouri examines escalating Hezbollah-Israel tensions.

Libya/Tunisia: The two countries will begin to reopen a border crossing today that had been closed for more than three months, Libya’s interior ministry said. It had been shut after armed clashes between security forces and residents in the Libyan city of Zuwara. The crossing is now opening for emergencies and due to be fully reopened by June 20. (The National)

Sub-Saharan Africa

The Inkatha Freedom Party said it will join the ruling African National Congress (ANC) and opposition Democratic Alliance in a unity government ahead of tomorrow’s deadline. The other two parties did not immediately comment as political dealmaking continues after the ANC lost its long-standing majority in last month’s election. (BBC)

Africa: Powerful opioids known as nitazenes have been detected in people who use drugs in African countries including Guinea-Bissau and Sierra Leone following their previously known use in Asia and Western countries, the Global Initiative Against Transnational Organized Crime said in a new report yesterday. The opiates have been associated with overdose deaths. (AP)

Europe

The first two years of Russia’s war in Ukraine generated at least 175 million tons of carbon dioxide equivalent, higher than the 2022 individual annual output of Kuwait, the Netherlands, and Venezuela, a new report by the Initiative on Greenhouse Gas Accounting of War found. It is the most comprehensive study to date on conflict-driven climate impacts. The emissions were calculated based on warfare, military-linked fires, future reconstruction, diverted flights, and emissions leaks from attacks on fossil fuel infrastructure. (The Guardian)  

Americas

If the bill passes the country’s lower legislative chamber, it would enact the first major legislative changes promoted by far-right President Javier Milei. The privatization of Argentina’s national airline was removed from the bill to help it pass the Senate in a 37–36 tie-breaker vote as protesters demonstrated against the measure outside congress. (Bloomberg)

Bolivia: The country will send military forces to gas stations to protect against theft of subsidized fuel amid nationwide fuel and dollar shortages. President Luis Arce said he would meet with truck drivers over the weekend to address their concerns. (Bloomberg)

United States

At a Federal Reserve meeting yesterday, officials left rates at their more than two-decade high of 5.3 percent and predicted they would lower them just once before the end of the year. The meeting was closely watched for how officials would react to news that inflation cooled more than expected in May. The Fed’s posture diverges from that of other developed-world central banks; those in Canada, Sweden, and Switzerland have all cut rates this year. (NYT, WSJ) 

This Backgrounder by Anshu Siripurapu and CFR’s Noah Berman and James McBride unpacks the role of the U.S. Federal Reserve.

Global

Conflict in places such as Gaza, the Democratic Republic of Congo, Myanmar, and Sudan has driven displacement numbers up for the twelfth consecutive year, the UN refugee agency said in a new report. Its director added that without more concerted efforts to address conflict, human rights violations, and the climate crisis, displacement numbers and the costs of humanitarian response will rise. (UNHCR) 

At this CFR meeting, a panel of experts discusses the importance of international cooperation in managing migration.

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