Opposition to China's Huawei will grow among US allies

Subject The impacts of the arrest of Huawei's CFO in Canada. Significance Meng Wanzhou, chief financial officer (CFO) of Chinese telecoms equipment maker Huawei, was arrested while transiting at Vancouver airport on December 1, and faces extradition to the United States on charges related to Huawei’s alleged violations of US sanctions against Iran. This arrest will have serious consequences for Huawei's global operations and for China's relations with the United States and Canada. Impacts The case will encourage third countries to move away from Huawei components -- if they can afford to. Overseas suppliers and customers too may decide that the political risk of relying on Huawei is too high. This case will advance the 'de-coupling' of the Chinese and US technology sectors.

Significance Microsoft attributed the first hack exploiting these flaws to a Chinese state-sponsored group. These flaws were subsequently leaked online, and organisations that have failed to install software patches continue to be targeted. Over 30,000 systems have already been compromised in the United States alone, further straining US-China ties. Impacts The ubiquity of US technology will make vulnerabilities in US software a wider cybersecurity risk. Developing indigenous IT software and hardware will be unfeasible for most countries as rifts over 5G have exposed. Although tarnished, Microsoft will benefit from having few competitors in the business and domestic use software market.


Significance The decision followed the devastation caused by Hurricane Matthew, which struck the country on October 4, killing hundreds. With estimates of casualties and property damage still being revised upwards, it is unclear when the electoral authorities will be in a position to reschedule the much-delayed elections. Impacts The United States will push for elections to be rescheduled quickly, as it was opposed to the rerun in the first place. However, holding elections too quickly would be controversial, as it would risk disenfranchising displaced voters. Popular anger at the devastation will be ultimately channelled into frustration with the political paralysis. The crisis could drive up attempted migration to the Dominican Republic and the United States.


Significance In the wake of the terrorist attacks in Paris, the political debate on law enforcement 'going dark' due to encryption has resurfaced again in the United States and United Kingdom. However, governments have yet to demonstrate evidence of a loss of security capability because of encryption. Impacts The 'going dark' debate may be being used to distract from security agencies' existing surveillance capabilities. The debate's outcome could have a severe negative effect on consumer trust in internet-based businesses. Businesses will see opportunities in relocation to jurisdictions with robust laws that do not weaken cryptographic systems.


Significance The National Liberation Front (FLN) and Democratic National Rally (RND) received the most seats, as expected, amid widespread voter apathy. Impacts The government will continue its austerity strategy in response to the low oil price, and face more social tension and protests. The young generation will lose even more trust in the political system and opt for protest, resignation and emigration. The supporters of security and economic cooperation with the United States within the regime were strengthened.


Significance This is the latest in a series of deadly terrorist attacks attributed to al-Shabaab since late July hitting high-profile targets in Mogadishu. The militant group is succeeding in carrying out these strikes as the country prepares for a political transition. Impacts The United States and other Western backers of the Somali government will step up security support to safeguard the elections. Al-Shabaab will accelerate complex attacks into November aimed at soft targets. The attacks will fail to disrupt upcoming indirect elections but could undermine confidence in security and the political process.


Subject The prospects for finalising TTIP. Significance While the EU as a whole -- the European Commission, most member states and a majority of members of the European Parliament (EP) -- appears to remain committed to a wide-ranging agreement with the United States, there are growing indications that public opposition may render the proposed Transatlantic Trade and Investment Partnership (TTIP) agreement politically unviable. Impacts TTIP is estimated to raise the EU's GDP by 0.5%. European governments may decide that such a modest growth boost is not worth the political problems generated by the negotiations. If implemented, its terms could serve as a blueprint for future trade agreements between the EU and other countries. The deal's prospects will be diminished by the US election cycle's appeals to protectionist sentiment.


Subject Developments in oil refining. Significance The State Oil Company of Azerbaijan (SOCAR) will shake up the refining sector and petroleum products market later this year, when the SOCAR Turkey Aegean Refinery (STAR) is commissioned, Turkey’s fifth refinery and its first new one for three decades. With demand for products set to continue rising and flows of Iraqi crude to increase as Baghdad re-exerts control over its northern oilfields and export pipeline, two more refineries are planned, which could further reduce Turkish dependence on product imports. Impacts Corporate plans to expand refining chime with the political thaw in relations between Turkey and Iraq. STAR will refine heavy regional rather than light Azeri crudes -- the product mix includes petcoke, in great demand for cement manufacture. Tupras has huge volumes of petrol to export, mainly to the United States, because the tax regime inclines domestic drivers to use diesel. The preference for diesel over petrol is affecting air quality in Turkey’s cities.


Significance Alternative explanations focus on chroncially weak investment and the relocation of production from developed to developing markets. The diagnosis matters because these imbalances are the source of significant tension and dissatisfaction within and between states. Impacts The Pettis-Klein analysis provides intellectual support for the United States's effort to overhaul its trade and financial ties with China. It would take a major crisis in the United States, EU or China to provide the political impetus necessary to reduce global imbalances. A lack of trust and the weakness of the UN and other international bodies will limit collaborative solutions to the imbalances.


Subject Prospects for the United States to end-2021. Significance The political landscape for the remainder of the year will be dominated by internal Democratic efforts to secure support for the White House agenda from various factions of the party. With the Biden administration’s momentum slowing as it faces the challenge of converting initiatives into legislation, the second half of 2021 is likely to see the White House placing a greater emphasis on foreign affairs.


Subject Hispanic voters in the United States. Significance The rising share of the electorate formed by Hispanic voters presents opportunities and threats for both the Democratic and Republican parties. The increase in Hispanic political influence will alter the political calculus in a number of key US policy debates, ranging from immigration to normalisation of relations with Cuba. Impacts Congress is unlikely to act on immigration reform until well after the 2016 elections. Republicans in more diverse states may have more success in reaching out to Hispanic voters than at the federal level. Generational assimilation and distance from the immigrant experience may mute the partisan leanings of US-born Hispanic voters.


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