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People displaced by fighting in Ethiopia.
State of emergency in northern Ethiopia
The security situation is spiraling in Ethiopia’s northern Amhara region with reports that an Amhara militia has wrested control of several towns from federal forces.
What triggered these clashes? This violence comes just nine months after a truce came into effect in Ethiopia’s northern Tigray region ending two years of bloody conflict between government forces and Tigray Defence Forces. (Despite accounting for just 7% of Ethiopia's population, Tigrayans dominated Ethiopian politics for decades until current PM Abiy Ahmed, from the Oromo ethnic group, came to power in 2018.)
After that conflict, Addis Ababa called for the dismantling of all regional forces, hoping to integrate them into the national army. But Amhara nationalists who have long felt isolated from national politics opposed the move and took up arms.
Deadly clashes between government forces and Amhara nationalists prompted the central government to declare a state of emergency in recent days, giving its forces power to conduct raids and detain people without a court order, as well as impose curfews and ban public gatherings. Meanwhile, Amhara fighters have reportedly looted government offices and raided prisons.
Ethiopia, ruled by a military junta until 1991, is deeply fragmented and made up of more than 90 ethnic groups, many of whom have traditionally felt excluded from political power.
As Africa’s second-most populous country, instability in Ethiopia can have a destabilizing impact on the entire Horn of Africa. That’s what happened in Tigray in recent years, with hundreds of thousands of refugees forced to flee to neighboring countries.
The US, for its part, has warned Abiy to get hold of the situation before things deteriorate further. But in a country rife with ethnic strife, it seems more likely that the situation in Amhara will worsen in the near term.
U.S. Secretary of Defense Lloyd Austin speaks at a joint press conference with South Korean Defense Minister Lee Jong-sup in Seoul, South Korea, 31 January 2023.
What We’re Watching: Pentagon leak fallout, Manhattan DA sues House Republicans, new source of tension in Ethiopia
The fog of leaks
Fallout continues from the leak of secret US documents related to the war in Ukraine. The leaked info suggests that Egypt, one of the world’s largest recipients of US military aid, planned to secretly supply Russia with tens of thousands of rockets for use in Ukraine and that the United Arab Emirates, also a key US ally, would help Russia work against US and UK intelligence. Egypt and the UAE say these reports are false.
Another document suggests that US eavesdropping on its ally South Korea indicated that aides to South Korea’s president had discussed sending artillery shells to the US or Poland for use by Ukraine, a move that would violate South Korea’s policy of refusing to export weapons to any country at war.
US Defense Secretary Lloyd Austin has claimed that “quite a few of the documents in question were fabricated,” but he isn’t saying what’s true and what isn’t. The world may never know who leaked these documents, why they were leaked, and which parts of them, if any, were entirely fabricated or partially altered. But the headaches for those who must now repair damaged international relationships are real, and the domestic political fallout for leaders of some of these countries, particularly South Korea, will continue.
Manhattan DA sues House Republicans
Manhattan District Attorney Alvin Bragg announced Tuesday that he’s suing House Republicans for allegedly interfering in the criminal case against former President Donald Trump.
Bragg’s lawsuit is focused on the actions of Congressman Jim Jordan of Ohio, who chairs the House Judiciary Committee. In the 50-page suit, Bragg accuses Jordan of “a transparent campaign to intimidate and attack” the district attorney as his office pursues criminal charges against the former president for allegedly breaking campaign finance laws by making a hush-money payment to a porn star.
House Republicans have demanded that Bragg’s office hand over documents and testimony related to the Trump case, insisting that the committee has oversight rights. Crucially, Jordan had issued a subpoena for Mark F. Pomerantz to deliver a closed-door deposition. Pomerantz is a former assistant DA who left his job last year after Bragg reportedly opposed a wider tax-and-insurance fraud prosecution of Trump, which Pomerantz favored.
Bragg has sued to block the subpoena saying it amounts to “an unconstitutional attempt to undermine an ongoing New York felony criminal prosecution and investigation.”
Whatever happens, as this case makes its way through the courts, Jordan will be delayed in getting his hands on the documents and testimony he is seeking.
Fresh unrest hits Ethiopia
For almost a week now, protests have raged in the Ethiopian region of Amhara over a federal government plan to absorb local security forces into the national army.
The tensions are only the latest example of how fragmented Africa’s second most populous country has become. It was just months ago that the government finally reached a peace deal with separatist militants from the region of Tigray, ending a gruesome civil war that had displaced millions.
In that conflict, as it happens, Amhara’s local forces fought alongside the government, pursuing long-standing grievances and territorial claims against their Tigrayan neighbors.
Now Ethiopian PM Abiy Ahmed wants to eliminate all regional forces of that kind. For Abiy, it’s necessary to strengthen national unity. He won’t back down, he says, even if a “price needs to be paid.” But the Amharas worry that without those forces, they’ll be vulnerable to fresh attacks from other ethnic groups or the federal government itself.
That puts Abiy in a familiar bind. Five years after popular protests swept him to power with a mandate to liberalize Ethiopia’s political system, he is still struggling to master the country’s ferocious ethnic and regional rivalries.
Ukraine's President Volodymyr Zelenskiy awards a Ukrainian service member at a position near a frontline, in Donetsk region, Ukraine March 22, 2023.
What We’re Watching: Zelensky’s Bakhmut message, Rishi’s post-Brexit win, Trudeau’s take on Haiti, Ethiopia’s peace progress
Russia and Ukraine score points where they can
Volodymyr Zelensky visited frontline troops in war-ravaged Bakhmut, located in Ukraine’s eastern province of Donetsk, on Wednesday as Russian drones struck across the country. While planning for the trip was surely well underway before Vladimir Putin’s surprise stop in Russian-occupied Mariupol last weekend, the contrast underlined Zelenksy’s signal of defiance.
By appearing in Bakhmut very near the fighting, Zelensky reminded the world that, six months after Putin mobilized 300,000 new Russian soldiers for a deeper advance into Ukraine, even the small city of Bakhmut remains beyond their grasp.
In other war news, Russia has warned it will respond harshly to shipments from the UK to Ukraine of anti-tank munitions made from depleted uranium. Moscow claims this step adds an escalatory nuclear element to the conflict. In response, the UK insists the Russian position is propaganda, that the use of depleted uranium is common in anti-tank weapons, and that it contains nothing that can be used to make nuclear or radiological weapons. Finally, Russia has announced a plan to raise an additional $8 billion in revenue by changing the way oil profits are taxed.
All these stories underscore the reality that, while little has changed on the battlefield, Russians and Ukrainians are still looking for every small advantage they can gain in what looks increasingly like a war of attrition.
Has Brexit got “done” yet?
In a win for PM Rishi Sunak, the British House of Commons on Wednesday passed a reworked post-Brexit deal for Northern Ireland, which was agreed to last month with the European Commission.
Essentially, the proposal known as the Windsor Framework creates two lanes for trade: a faster-flowing green lane for goods transiting only between Britain and Northern Ireland and a red lane with more rigorous customs checks for goods bound for Ireland and elsewhere in the EU. It is unlikely to come into effect for several months as details are ironed out, officials say.
Still, despite the big margin of victory, more than 20 Tories – including Sunak’s two predecessors Liz Truss and Boris Johnson – voted against the measure, with Johnson saying it would mean that the UK won't be able to fully embrace the benefits of Brexit (what benefits, he didn’t say). It also signals that in the run-up to next year’s general election, Sunak will continue to deal with a vocal Euroskeptic wing within his party.
Meanwhile, six representatives from Northern Ireland’s Democratic Unionist Party also rejected the vote, suggesting that the DUP would not lift its boycott on the Northern Ireland legislature, which began almost a year ago. The lack of resolution on this front will make for awkward optics as President Joe Biden heads to Belfast next month to mark the 25th anniversary of the Good Friday Agreement that ended the Troubles.
Trudeau’s take on Haiti
President Joe Biden heads north on Thursday for his first presidential visit to Canada, where he and PM Justin Trudeau are expected to discuss a variety of issues, from defense and immigration to trade and Ukraine (see our look at likely agenda items here). But Biden is also expected to make some demands about … Haiti.
The situation in the Caribbean nation has deteriorated in recent months. Police have lost control to local gangs, and more than 200 Haitians were killed in the first half of March alone.
The Biden administration is reluctant to get more involved itself but wants Canada to take the lead in addressing the chaos in Haiti. Why Canada? The country has a long track record as a peacekeeper and has had prior involvement (for better or worse) in Haiti, making it an obvious choice from Washington’s perspective. An uptick in Haitian migrants seeking entry to the US and Canada raises that urgency further.
But Trudeau says that “outside intervention” can’t bring long-term stability to the country, and it’s hard to argue with the historical record on that. Meanwhile, many in Haiti worry that outsiders would merely prop up unelected acting PM Ariel Henry. And it didn’t help that Haiti’s largest newspaper ridiculed the recent deployment of two Canadian ships to patrol the coast.
All of this puts Trudeau in a tough spot: Biden wants him to be a reliable security partner beyond Ukraine, but the political fallout from a failed entanglement in Haiti could be disastrous for him. While the Canadian leader will likely make a commitment of some sort for Haiti, will it be enough to satisfy Biden or change the dynamics in Haiti itself?
*From trade and migration to defense, culture, and technology, the US and Canada need each other more than ever. To meet the moment, GZERO Media is launching GZERO North, a new weekly newsletter offering an insider’s guide to the very latest political, economic, and cultural news shaping both countries. Subscribe today!
Ethiopia, TPLF take steps in tenuous peace
The Ethiopian government is removing the Tigray People’s Liberation Front from its list of terrorist organizations, part of a peace deal with the rebel group signed last November. The decision moves the country closer to what observers hope is an enduring peace after a brutal two-year civil war that has claimed an estimated 600,000 lives.
The situation is very delicate. The agreements don’t include all of the various combatants and are vague about who controls certain disputed territories. And while all sides reportedly committed war crimes, many Tigrayans believe the deal doesn’t hold the Ethiopian federal government accountable. PM Abiy Ahmed’s resistance to a UN investigation inspires little hope.
Still, the momentum is towards peace, for now. Economic interests are part of the reason why. Ethiopia is in bad shape, as the country is wracked by famine, drought, and an estimated reconstruction price tag of $20 billion. A lasting peace would enable Ethiopia to reopen two-year-old talks with the IMF on a $26 billion loan restructuring plan, which was interrupted by the war. Still, with so much bad blood – will these incentives be enough to bind the former combatants to a durable peace? All parties must still tread very carefully …
What We're Watching: Biden's oil dilemma, Abiy Ahmed takes up arms, Iran nuclear talks on life-support
Biden's oil dilemma. The Biden administration says it will release some 50 million barrels of crude from US stockpiles in a bid to reign in soaring gasoline prices. Similar moves were made by Japan, South Korea, and China in recent days as global energy prices rise and supplies remain scarce in many places amid the ongoing economic recovery. Pain at the gas pump and broader inflation concerns in the US have contributed to Biden's tanking poll numbers. With Republicans poised to do well in next year's midterm elections, the president is under pressure to turn things around fast. But Biden has already come under fire from environmental groups, who say the president's move flies in the face of his Glasgow commitments to reduce rather than boost fossil fuel consumption. But in domestic politics, bread-and-butter issues are paramount, and if Biden doesn't "fix" the gas problem hurting American families, the Democrats could suffer a beating at the polls. What's more, Biden has also angered the 23-nation Organization of Petroleum Exporting Countries, which worries that extra US oil on the market will bring down prices for their own crude. Now the organization is warning that it might renege on an earlier promise to produce more oil.
Abiy Ahmed takes to the battlefield. Ethiopian PM Abiy Ahmed, a Nobel Peace Prize winner who has also been accused of leading a civil war where crimes against humanity have been committed, says he will personally lead the army "on the battlefield" as the rival Tigray People's Liberation Force make inroads towards the capital Addis Ababa. Abiy has called for "martyrdom" in his year-long conflict with the TPLF, who dominated Ethiopian politics for decades before Abiy took power in 2018. Abiy, a former soldier who recently called on all able people to fight, is not messing around: he said that regional and national government officials will take over his duties while he takes up arms. This latest development in a civil war that's killed tens of thousands and displaced some 2 million people comes just weeks after reports that Tigrayan rebels captured key territory around the capital and suggests that Abiy's (political) days may be numbered.
Are Iran nuclear talks collapsing? An Iranian delegation will meet with European, Russian, and Chinese counterparts in the upcoming days for the first time since Iran's hardline President Ebrahim Raisi took office this summer. The Americans will be in Vienna too, but they won't attend face-to-face meetings with the Iranians. Six months ago, the Biden administration was optimistic that it could revive the 2015 nuclear deal, but that's in doubt now, as the sides remain very far apart. Iran continues to enrich uranium to near bomb-making levels, while denying access to international inspectors. Meanwhile, the Biden administration won't lift sanctions until Tehran stops enrichment and has balked at Iran's (impossible) demand for guarantees that future US administrations won't impose economic sanctions. With prospects for a comprehensive deal fading, the US is reportedly already considering alternatives, including an interim deal that would simply freeze the status quo. That might be better than nothing, but according to some estimates, Tehran is already just weeks away from being able to develop a nuclear weapon meaning that the status quo is a dangerous one.
Is Ethiopia's government about to fall?
Ethiopia's civil war has now reached a crucial moment. Anti-government forces are approaching Addis Ababa, the country's capital, and look set to take control there very soon. "The important question," warns Connor Vasey, Ethiopia analyst at Eurasia Group, "is on what terms they would do so: with the prime minister and his government conceding or with their violent removal."
The background: In 2018, Abiy Ahmed became Ethiopia's prime minister, ending 30 years of rule by power brokers from the Tigrayan ethnic group. His pledge to bring Ethiopians of all ethnicities together, to build a modern national identity for his country, and his decision to end the country's long war with Eritrea won him the 2019 Nobel Prize.
But anti-government violence in the Tigray region, home to about six million of Ethiopia's 115 million people, pitted Abiy's government against the Tigray People's Liberation Front (TPLF), which had won power in local elections that Abiy's government refused to recognize.
In November 2020, Abiy launched an assault on TPLF forces, and the fighting that followed killed thousands of people and has driven more than two million from their homes. The UN says all sides in this conflict have committed atrocities, including rape and the murder of civilians.
By July 2021, the bloodshed had spilled over into the neighboring Afar and Amhara regions, and in August, Abiy called for "all capable Ethiopians" to take up arms to defend themselves against the rebel forces. This only encouraged opposition fighters to believe the government lacked confidence in its own military. The TPLF then teamed up with the Oromo Liberation Army (OLA), capable militants who fight in the name of Ethiopia's largest ethnic group. The OLA has already consolidated major territorial gains in the Oromia region, which surrounds the capital.
This Tigray-Oromo alliance is now demanding Abiy's surrender or ouster, and it insists that government officials must be charged with war crimes. On November 4, Ethiopia's parliament declared a state of national emergency.
The United States is now trying to broker a ceasefireto avoid a battle inside the capital. The problem, says Eurasia Group's Vasey, is that "both sides know talks are necessary to avoid further bloodshed and disruption but are stuck on the belief they can beat the other side into irrelevance before negotiations begin."
What happens next will matter for decades. A diplomatic deal would save lives, limit the number of refugees seeking sanctuary, and protect Ethiopia's economy — one of Africa's strongest — from potentially catastrophic and lasting damage. But even a deal could quickly unravel, as victorious forces fight over spoils and seek revenge against rivals.
A violent overthrow of the government, on the other hand, "is clearly the worst outcome for Ethiopia," warns Vasey, "because there is no government-in-waiting with nationwide legitimacy that can manage the political, economic, and human fallout."
A vacuum of power in the capital would paralyze Ethiopia's government and create economic upheaval in every region of the country. That, in turn, could multiply the number of refugees seeking sanctuary. In fact, neighboring Kenya has already tightened its 500-mile border with Ethiopia.
Paralysis in Addis would also prevent the Ethiopian government from playing its important role as a peace-broker in South Sudan and a bulwark against terrorist groups across East Africa.
Unfortunately, that worst-case scenario — a violent overthrow of Abiy's government — looks all too likely at the moment, because a prime minister and government officials facing the prospect of war crimes charges don't have much incentive to stand down their soldiers. "We will sacrifice our blood and bone to bury this enemy and uphold Ethiopia's dignity and flag," Abiy declared this week.
A man reacts during a rally to support the National Defense Force and to condemn the expansion of the Tigray People Liberation Front fighters into Amhara and Afar regional territories at the Meskel Square in Addis Ababa, Ethiopia August 8, 2021.
What We're Watching: Everyone vs Ethiopian PM, Brazil ditches Huawei, (more) trouble in Sudan, Argentina's midterms, Iraqi powder keg
Opposition forces unite in Ethiopia's civil war. The Tigray People's Liberation Front, which has been locked in a brutal year-long civil war against Ethiopian government forces, has now teamed up with another powerful militant outfit that wants to oust Prime Minister Abiy Ahmed. The TPLF, now in alliance with the Oromo Liberation Army — which claims to represent Ethiopia's largest ethnic group — have swept towards the capital Addis Ababa in recent days, prompting the embattled Abiy to call on civilians to take up arms in defense of the city. The Tigray-Oromo alliance, called the United Front of Ethiopian Federalist Forces, has called for Abiy's immediate ouster, either by negotiation or by force, and for the prosecution of government officials for war crimes. The UN says all sides in the conflict have committed abuses. The US, which has threatened to suspend Ethiopia's trade preferences over the government's alleged war crimes, is currently trying to broker a cease-fire. When Abiy came to power after popular protests in 2018, he was hailed for liberalizing what was formerly an extremely repressive government (controlled, as it happens, by the TPLF). Now it's looking like he may have unleashed the very forces that could tear the country apart and drive him from office — or worse.
Is China shut out of Brazil's 5G comp? Earlier this year, Brazil's President Jair Bolsonaro set an ambitious deadline to roll out 5G broadband – which provides much faster internet connections — by July 2022. In recent days, telecom firms have been vying to get a piece of the pie as the tender process heats up. Indeed, it's a lucrative prospect for telecom companies in a country where more than three-quarters of the population (or roughly 190 million people) are connected to the World Wide Web. But the process has not been smooth sailing because, well: China. Bolsonaro has been under a lot of pressure from China skeptics within his own government, and Washington, to exclude tech giant Huawei from the bidding wars. Bolsonaro ultimately caved, as Beijing has evidently been locked out of the process for now. Claro, a Mexican-Brazilian venture, and Spain's Telefonica seem to have walked away big winners from the 5G auction after putting up the most cash for spectrum rights. But this is all very awkward because Huawei has been a major tech provider in Brazil for decades, and local cell phone operators also rely on Huawei's tech. What's more, excluding Huawei, by far the most cost-effective supplier of 5G equipment in the country, will increase the project's overall cost, which is now expected to exceed $7 billion. Many remain skeptical that this massive task can be pulled off in just nine months. But whenever it does happen, it will be great news for Brazilians, many of whom live in remote areas with shoddy internet access.
Sudan on the brink. Two weeks after a military coup in Sudan, the country's security situation continues to deteriorate. On Sunday, soldiers responded to pro-democracy protests in Khartoum by tear-gassing and arresting more than 100 teachers who refuse to return to work until the transitional civilian-military government is restored. (The intervention drew comparisons to the harsh crackdown against protesters that eventually led to the ousting of longtime despot Omar al-Bashir in 2019.) Meanwhile, civilian PM Abdalla Hamdok remains under house arrest, and the internet is still shut down. Arab League mediators have arrived in the capital to try to mediate between junta leader Gen. Abdel-Fattah Burhan and the pro-civilian forces, but Burhan refuses to even call the power grab a coup. The country's largest union, which played a pivotal role in the 2019 protest movement, has called a two-day national strike — the opening salvo of a campaign of civil disobedience to force the military back to the negotiating table. Since the generals show no signs of backing down, the odds of more bloodshed are growing by the day.
Argentina votes, ruling party in trouble. Argentines go to the polls this coming Sunday to vote in the country's midterm legislative elections, with the ruling leftwing coalition of President Alberto Fernández bracing for heavy losses in both houses of parliament. The result will likely reflect the outcome of last September's primary elections, where the president's allies got clobbered by the center-right opposition. Since then, Fernández has caved to pressure from his powerful VP, former president Cristina Fernández de Kirchner (no relation), to double down on social spending and government intervention in the economy to curb skyrocketing inflation. But it hasn't worked: Fernández has capped prices on a whopping 1,432 products, yet annual inflation remains over 50 percent. Without a senate majority, it'll be very hard for the president to get much done in the second half of his term at the worst possible time: economists fear Argentina may stiff the IMF on part of the $45 billion it owes early next year. Another default could lead to a run on banks like in 2001, when the country suffered one of its worst financial crises ever. With presidential elections not on the horizon for another two years, buckle up for a lot of political instability until then.
Iraqi PM's narrow escape. Iraq's PM Mustafa al-Kadhimi is lucky to be alive after a barrage of explosives was fired at his compound inside a high-security zone, injuring several security personnel. The brazen attack was carried out by pro-Iran militias, who have been violently calling for a recount since their parties did poorly in the recent parliamentary elections. On Friday, the militias tried to breach the fortified area known as the "Green Zone," which includes the PM's compound and Western embassies. Pro-Iran factions are particularly worried that Shia Muslim cleric Muqtada al-Sadr — whose party won the biggest share of votes and is trying to form a government — will try to temper Tehran's growing influence over the oil-rich country. (Al-Sadr has called for way less foreign interference in Iraq from Iran and the West). Even before the recent unrest, things weren't going well in Iraq, where power supplies are scarce and the economy is in shambles. What's more, Iraqis have little faith in the political elite's ability to fix things, as was reflected in the record-low election turnout. We're watching to see if this latest round of violence begets… more violence.
What We're Watching: Ethiopia's opposition groups join forces
Opposition forces unite in Ethiopia's civil war. The Tigray People's Liberation Front, which has been locked in a brutal year-long civil war against Ethiopian government forces, has now teamed up with another powerful militant outfit that wants to oust Prime Minister Abiy Ahmed. The TPLF, now in alliance with the Oromo Liberation Army – which claims to represent Ethiopia's largest ethnic group — have swept towards the capital Addis Ababa in recent days, prompting the embattled Abiy to call on civilians to take up arms in defense of the city. The Tigray-Oromo alliance, called the United Front of Ethiopian Federalist Forces, has called for Abiy's immediate ouster, either by negotiation or by force, and for the prosecution of government officials for war crimes. The UN says all sides in the conflict have committed abuses. The US, which has threatened to suspend Ethiopia's trade preferences over the government's alleged war crimes, is currently trying to broker a cease-fire. When Abiy came to power after popular protests in 2018, he was hailed for liberalizing what was formerly an extremely repressive government (controlled, as it happens, by the TPLF). Now it's looking like he may have unleashed the very forces that could tear the country apart and drive him from office — or worse.
What We’re Watching: Ethiopian emergency, Euro bubbly war, US Fed vs inflation
Things go from bad to worse in Ethiopia. Ethiopia's embattled PM Abiy Ahmed has imposed a state of emergency and called on ordinary citizens to take up arms, after a swift advance by the Tigrayan People's Liberation Front put the rebels within striking distance of the capital, Addis Ababa. For a year now, Abiy's forces have been at war with the TPLF over the militant group's demands for the Tigray region to have more autonomy from the central government. The TPLF ran all of Ethiopia for decades, but they lost power after a popular uprising led to Abiy's appointment in 2018. The current conflict has seen possible war crimes by all sides, but the allegations against Ethiopian government forces in particular have prompted the US to revoke the country's preferential trade status, effective next year. All of this puts Abiy in a very tough position: last November he launched what he thought would be a quick war to squelch the TPLF, but now he is losing ground badly and could soon lose a critical source of economic support. Does he pull out the peace pipe or look for bigger guns? It seems like ages ago this guy won a Nobel Prize, but no heroes are safe these days. And with neighboring Sudan in political turmoil as well, things are looking dicey in the strategically-significant Horn of Africa.
Italy & Croatia spar over Prosecco. It may not be as famous as its bubbly cousin champagne, but Italy's Prosecco is actually the world's top-selling wine. And now Rome wants to make sure no one else can sell it if it's not from the Italian town of Prosecco near Trieste. No way, say Croatian winemakers, who claim that what they call "Prošek" was first made 300 years before the Italian version. The Croatians want EU protections to market the stuff under that name, but the Italians say that would just confuse people. Fizzing things up further, it turns out that Prosecco and Prošek are made with different grapes, and share little in common other than etymology and a starring role at brunch. And confusing things even more, Italians of Slovene origin love another sparkling wine called Prosekar. The dispute is a big deal because EU rules on product origin help Italy sell roughly 550 million bottles of Prosecco for $2.8 billion each year. We'll be sipping a glass of any variety of Adriatic bubbly while we wait for the EU to rule on the issue in a few months.
Fed begins "taper" as inflation won't go away. The US Federal Reserve announced on Wednesday it would cut back on its monthly purchases of Treasury bonds, the first step towards pulling back its extraordinary aid to the economy as COVID-induced inflation remains stubbornly high. Since the pandemic began, the Fed has been buying up some $120 billion worth of US government debt each month in order to boost borrowing/spending and hiring while keeping interest rates low. But now that the US economy is in better shape — despite ongoing supply-chain disruptions, that is — the Fed is worried about inflation. In fact, the Fed now (finally) admits that prices are likely going to continue rising longer than it initially predicted. We're not economists, but basically what happens next depends on how bad inflation gets: if prices keep going up, the Fed will slash its bond-buying even more, and if that doesn't work it'll take the more drastic step of raising interest rates.