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Natural gas pipeline.
What We're Watching: Russia cuts off gas, EU cuts off Hungary, Erdogan wants to cut Saudi deal
Is Russia’s gas strategy backfiring?
European natural gas prices soared on Wednesday after Russia turned off the gas taps to Bulgaria and Poland. Both countries, which are members of the EU and NATO, had refused to meet Vladimir Putin's recent demand that any countries deemed "unfriendly" to Moscow must pay for Russian gas in rubles. So far, Hungary is the only EU member state willing to do that, but it accounts for just a tiny portion of overall Russian gas sales to Europe. The bigger problem is whether private companies will defy their governments by agreeing to pay in rubles — and at least four have reportedly agreed to do so. For now, larger European countries like Germany have promised they'll share their gas supplies with Bulgaria and Poland so long as the Russian pipes remain closed. If that solidarity holds, and if the EU continues with plans to dramatically reduce its reliance on Russian gas, Moscow's gas leverage over the Europeans might not be as strong as Putin thought. That said, he may be betting that European consumers — read: voters — won't be willing to put up with higher prices indefinitely, particularly once winter rolls around again. Natural gas stories tend to play out over long periods of time — this one will be no exception.
Will the EU cut off Hungary?
The European Union and Hungary have long been at loggerheads over Budapest’s deteriorating democratic track record under PM Viktor Orbán and his right-wing Fidesz Party. Brussels upped the ante this week by triggering a mechanism that would allow it to withhold several billion dollars in funds from Budapest. Though details remain unclear, Brussels said that the move pertains to government corruption and the Hungarian judiciary's failure to crack down on graft. Orban, a right-wing populist who has proudly dubbed Hungary an “illiberal democracy,” recently won reelection, much to the dismay of bureaucrats in Brussels who have long accused his party of diluting judicial independence, cracking down on the press, and gerrymandering. Budapest will now have two months to respond to the motion, which will need a “qualified majority” to pass – meaning it must be backed by 55% of EU countries representing 65% of the bloc’s population. The timing is very bad for Orban, who is trying to prop up Hungary’s sagging economy – which is currently experiencing its highest inflation rate in 15 years – and was relying on EU funds for a post-pandemic boost.
Erdogan visits Saudi Arabia to bolster ties
In the latest sign of an ongoing detente between Ankara and Riyadh, Turkish President Recep Tayyip Erdogan is set to visit Saudi Arabia on Thursday to meet with Saudi Crown Prince Mohammed bin Salman. Relations between the two states have long been strained, in large part because Riyadh accused Turkey of backing terror groups and supporting Qatar in its long-running diplomatic dispute with Saudi Arabia. Turkey-Saudi ties got even worse after journalist Jamal Khashoggi was killed by Saudi operatives in Istanbul in 2018, leading to mutual recriminations and Riyadh’s blocking of most Turkish imports. But improving ties with the Gulf states, as well as with Egypt and Israel, has been central to Erdogan’s plan to revitalize his country’s ailing economy (hyperinflation recently surpassed 60%). As part of a detente, Turkey recently acquiesced to Saudi demands, allowing the Khashoggi murder trial to be held in Riyadh (the defendants were being tried in absentia anyway). This irked human rights groups but appears to have paid off for Erdogan: Turkish exports to Saudi increased by 215% in March compared to the same time last year, and economic cooperation between the two regional powers looks likely to expand.
What We're Watching: Turkey's Afghanistan play, Indonesia as COVID epicenter, EU's rule of law report
Turkey's Afghanistan play: With the US withdrawal from Afghanistan nearly complete, many countries (and non-state actors) are vying for influence there. The latest player to enter the stage is Turkey, with president Recep Tayyip Erdogan proposing that Turkish troops defend and operate Kabul's international airport when the US is gone. Erdogan said that to make the plan work, the US would need to hand over logistical facilities to Ankara, and has called on Washington to back Turkey in ongoing diplomacy in Afghanistan, which it says is crucial to securing Kabul's airport, the main way into the country for the international community. The Americans, for their part, appear to be open to the idea. That's because it would mean handing over the headache of securing Afghanistan's only international airport to a fellow NATO member, reducing the likelihood of Afghanistan becoming completely shut off from the rest of the world in the (likely) event of a Taliban takeover. From Turkey's perspective, taking a more active role in stabilizing Afghanistan might earn it some goodwill from Washington and Brussels at a time when relations with both are at historic low points. The Taliban, meanwhile, said Turkey's pitch was "reprehensible."
Indonesia — COVID hot zone: Indonesia is now the epicenter of the global COVID crisis, overtaking Brazil this month in recording the most daily deaths from COVID-19. Indonesia, a country of 270 million, is now also registering more new cases than India. The worst outbreaks are on populous Java island, where more than half of all Indonesians live. The country's cumulative official death toll currently stands at over 74,000, but experts say that is certainly an undercount given scarce testing and contact tracing throughout the country. The current deadly surge comes as Indonesia, the world's most populous Muslim country, celebrates the Eid al-Adha holiday, sparking fears of yet more infections spreading despite bans on gatherings in many places. What's more, just 6 percent of Indonesians are fully vaccinated, and mostly with the Chinese-made Sinovac shot, which has a lower efficacy rate than the European and American-made vaccines. (Over 100 healthcare workers died from COVID after being fully vaccinated with the Sinovac shot, according to one study.) Jakarta is now vying for Western made vaccines, which have proven to be more effective against the spreading Delta variant, and said it expects millions of doses of the Pfizer-BioNTech shot to arrive in the second half of this year.
Does the EU's rule of law report matter? When Ursula von der Leyen took the reins of the European Commission in 2019, she backed a new, annual rule of law report for the 27-member bloc as one of several tools to monitor — and prevent — democratic regression in member states. This year's reports, released on Tuesday, shine a light on the usual suspects: Poland and Hungary and their crackdowns on LGBTQ rights and undermining of judicial independence. The report also highlights attacks on the media in Malta and Slovenia, which currently holds the bloc's rotating presidency. But civil society advocates say that while the EU's report is welcome, it's also toothless because it lacks enforcement power and dishes out no real consequences for governments that fail to adhere to EU norms. The Commission, on the other hand, says the report is not meant to be a coercive tool, and that it serves its purpose of illuminating the problem by highlighting best — and worst — practices. We're watching for the responses of both Poland and Hungary, which are waiting on the EU to approve their spending plans for post-COVID recovery. (In order to unlock EU COVID relief funds, the bloc's 27 economic and finance ministers need to give the go ahead to member states' individual spending proposals. Poland and Hungary are still waiting.)