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British pound coins are seen in front of displayed stock graph.

Reuters

What We’re Watching: Bank of England intervenes, Pyongyang provocations, Israel-Lebanon gas deal

Bank of England to the rescue?

The Bank of England stepped in Wednesday to try and calm markets that had gone haywire after the Conservative British government, led by new PM Liz Truss, introduced £45 billion ($49 billion) worth of tax cuts despite sky-high inflation. The bank will fork out £65 billion ($70 billion) to buy government bonds “at an urgent pace” to try to revive investor confidence and boost the pound, which recently fell to a record low against the US dollar. This development comes after the International Monetary Fund issued an unusual rebuke this week of British fiscal policy, warning that the tax cuts would exacerbate inequality. There are also concerns that some pension funds, which invest in government bonds, could be made insolvent following the collapse of UK government bond prices in recent weeks. Though the bank’s intervention is significant, there’s no indication that the Truss government is willing to reverse course (i.e. limit borrowing) to regain market trust. Meanwhile, in a keynote speech Wednesday, Labour leader Keir Starmer said Tories had “crashed the pound,” noting that “this is a Labour moment.” Indeed, Labour is currently trouncing the Conservatives in the polls, but Starmer would need to maintain this momentum until the next general election, which must be held by January 2025.

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Russia Will Cut All Gas To Europe By Winter | World In :60 | GZERO Media

Russia may cut off Europe's gas; sanctions will hold

Ian Bremmer shares his insights on global politics this week on World In :60.

Will Russia cutting gas sanctions to Europe lead to the EU lifting sanctions?

I don't see it. I've got to tell you, I do think that Russia will cut all of the gas to Europe by winter. It's where their leverage is, but let's keep in mind these are EU sanctions unanimously supported by all EU member states. That means that individual countries that don't like them don't suddenly break from the EU. Would have to come to that agreement. They're not going to. We've gone through seven rounds now. It's quite something. I do think you could see individual European countries start trying to pressure the Ukrainians to get to the negotiating table. Maybe even accept some loss of territory, which the Ukrainians will be very loathe to do. We'll watch that carefully. But the sanctions, the sanctions are not going away. They're not going away at all.

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North Korean soldiers on a vehicle carrying rockets during a military parade in Pyongyang.

REUTERS/Damir Sagolj

What We’re Watching: Russia buys North Korean arms, EU tilts at windfalls, Indonesians take to the streets

Russia scrambles for weapons

Newly declassified US intelligence claims that Russia is buying millions of artillery shells and rockets from North Korea. If true, this is yet more evidence that a Russian military leadership expecting a quick victory in Ukraine following its Feb. 24 invasion has badly miscalculated both Russia’s capabilities and the intensity and effectiveness of Ukrainian military resistance. The weaponry North Korea is providing is not the high-tech, precision-guided munitions that US and European export controls are designed to prevent Russia from producing. These are basic weapons that Russia appears unable to produce in needed quantities. US intelligence also suggests that a significant number of drones Russia has been forced to purchase from Iran have proven defective. These revelations underscore two important problems for Russia. First, Western sanctions are badly disrupting Russian supply lines, making it impossible for the Russian arms industry to produce the weapons that Russia would need to win the war in Ukraine. Second, while China remains happy to buy Russian oil, it has so far proven unwilling to defy US warnings not to violate weapons and parts sanctions against Moscow.

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Australia's former prime minister and federal Member for Cook Scott Morrison speaks to media during in Sydney.

AAP Image/Flavio Brancaleone via Reuters

What We're Watching: An Australian scandal, Israel and Turkey restore ties, North Korea in the Donbas

A rare scandal Down Under

Australia’s former Prime Minister, Scott Morrison, who lost general elections in May, is back in the spotlight after it was revealed this week that, at the height of the pandemic, he secretly appointed himself to head five additional ministries. (The Governor General – the Queen’s representative that formally presides over the executive – signed off on this.) Documents reveal that in 2020, Morrison, who now remains in parliament in the opposition, tapped himself to head the health and finance portfolios, followed by several other ministries the following year, including energy and resources. Making matters worse, Morrison’s colleagues in the Liberal Party didn’t know their boss had assumed these powers. In a defiant press conference Wednesday, Morrison said that he took this drastic move because of the public health emergency, and that he never acted as minister despite being secretly sworn into those positions. But the former PM remains in hot water: a mining company is accusing Morrison of “bias” for killing a permit to explore and drill for gas off the coast of New South Wales when he was secretly acting as head of the energy portfolio. Anthony Albanese, Australia’s new PM from the opposing Labor Party, said he is seeking advice on what – if any – the legal implications are. Meanwhile, several members of Morrison's own party have called for his resignation from parliament.

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A South Korean soldier walks past a TV in Seoul broadcasting a news report on North Korea firing a missile.

REUTERS/Kim Hong-Ji

What We're Watching: South Korea dangles Kill Chain, frozen Afghan funds thawing

South Korea dusts off "Kill Chain" vs. North

We think a potential nuclear war on the Korean Peninsula would be sparked by a first strike from the North. But what if the South launched a preemptive strike instead? Since Yoon Suk-Yeol was elected South Korea’s president in March, Seoul has been paying more attention to its decade-old “Kill Chain” program, which calls for a series of rapid strikes against key North Korean targets when South Korean intelligence believes Pyongyang is about to attack — possibly also taking out the supreme leader and top generals. Why is Yoon considering this? It’s likely in response to Kim Jong Un developing hypersonic missiles that would give the South less time to respond. Also, Yoon may want a plan B in case the US waivers on its long-term security commitment to South Korea — former US President Donald Trump, for instance, threatened to force Seoul to pay a bigger bill. But it’s a catch-22: knowing that the South Koreans have “Kill Chain” in place could deter Kim from attacking, or it could prompt him to do something drastic while he still thinks he has the upper hand over Seoul.

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Yuya Shino, Reuters

Will Shinzo Abe’s dream come true now?

In the wake of Shinzo Abe’s shock assassination on Friday, Japan’s ruling Liberal Democratic Party — which the former PM was campaigning for till he drew his last breath — swept the upper house elections on Sunday, giving the LDP and its allies the projected two-thirds majority required in parliament to amend the country’s postwar pacifist constitution, a yet unfulfilled dream of the slain leader.

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North Korea's Kim Jong Un walks away from what state media report is a "new type" of ICBM.

KCNA via REUTERS

Will standing up to North Korea work?

North Korea has engaged in an aggressive spate of missile testing this year. In response, the US and South Korea are changing tack and pushing back against Pyongyang with a more muscular show of force. Washington and Seoul’s robust replies are designed to push Kim Jong Un back to the negotiating table, furthering their quest to denuclearize the Korean peninsula.

But it’s a risky gamble. The fresh approach could convince an isolated and broke North Korea to talk shop, or Kim could double down and conduct his first nuclear test since 2017.

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A Russian-flagged bulk carrier transits the Bosphorus near Istanbul.

REUTERS/Yoruk Isik

What We're Watching: Black Sea wheat pirates, Kazakh referendum, Korean missile tit-for-tat

Donbas battle rages as stolen wheat hits high seas

Ukrainian and Russian forces are locked in a fierce battle for control of the strategic eastern city of Sievierodonetsk. Taking it would help Russian forces occupy a broader swath of the Donbas. Ukrainian President Volodymyr Zelensky, visiting frontline troops in nearby Zaporizhzhia, said his men had “a chance” to hold the city despite being outnumbered. The question remains — at what point should Ukraine consider negotiating? Meanwhile, US officials have warned as many as 14 countries that Russian grain ships may arrive with cargos pilfered illegally from Ukraine. Still, amid a growing global food crisis that’s been made worse by the war, are governments really prepared to turn away huge shipments of wheat?

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