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Hard Numbers: Women warriors of Ukraine, baby drought in Japan, cash for Colombo (not Peter Falk), tragic ending in Mexico
50,000: Every day is women’s day in Ukraine’s defense against Russia. As many as 50,000 women are currently serving in the Ukrainian military, more than triple the number when Russia first invaded in 2014.
799,728: After nearly a decade of steady decline, the number of babies born in Japan last year reached a record low of just 799,728 last year, prompting an adviser to PM Fumio Kishida to warn that “if we go on like this, the country will disappear.” Read our recent piece on why Japan is having so few babies, and what the government wants to do about it.
2.9 billion: Finally, a lifeline for Sri Lanka. The island nation, battered by the worst economic crisis in its history, is set to receive a $2.9 billion loan from the IMF later this month. Sri Lanka is already past due in paying China back nearly three times that amount, but Beijing recently agreed to a two-year pause on the payback.
2: Two of the four Americans kidnapped by heavily armed men in a northern Mexico border town have been found dead, and the remaining two have been rescued and returned to the US. The abduction may have been a case of mistaken identity: The gunmen reportedly mistook the travelers for Haitian drug smugglers, when they were really part of a group of friends who traveled to the town of Matamoros for affordable cosmetic surgery.
What We’re Watching: Sri Lanka’s shrinking military, mass shootings in America, McCarthy’s Taiwan visit, a common currency pipedream
Sri Lanka’s military downsize
In its latest bid to cut the economic fat, Sri Lanka's government announced that it will downsize its army, aiming to reduce the number of military personnel from 200,783 to 135,000 by next year and to 100,000 by 2030. Sri Lankan defense officials say the army is restructuring in order to boost its tech capabilities, primarily in cyberspace. But analysts highlight that this is part of President Ranil Wickremesinghe’s pledge to slash the bloated public sector, a precondition to unlocking a $2.9 billion bailout package from the International Monetary Fund. Crucially, military salaries make up around 37% of public wage costs. Cash-strapped Sri Lanka defaulted on its external debt for the first time in May 2022, after years of economic mismanagement led to acute fuel and food shortages – and forced Colombo to borrow heavily from India and China. With the bulk of Sri Lanka’s defense spending going to salaries rather than investment in equipment, this plan presents an opportunity for the country to correct its balance sheet. But some critics worry that Colombo, facing an internal terror threat, could be moving too hard too fast.
America’s gun violence disease
It’s been a deadly start to the year in America, with 38 mass shootings recorded nationwide in just three weeks. In recent days, two mass shootings in California in just 48-hours – including in Monterey Park, where 11 Asian Americans were gunned down while celebrating Lunar New Year, and in Half Moon Bay, where 7 were killed on Monday – have again put the spotlight on America’s unique gun problem. Communities in Florida, Louisiana, and Maryland are also reeling from mass shootings in recent weeks, reflecting the long established gun culture in America that distinguishes the US from other advanced economies. (For context, there are around 120 guns circulating in the US for every 100 people.) So, what happens now? President Joe Biden on Monday called on Congress to pass legislation banning assault weapons and raising the purchasing age to 21, but the newly empowered House Republican caucus will never go for it. Meanwhile, to defend their pro-gun position, Republicans are pointing out that many states with high gun-violence rates already have tight gun laws, but that ignores the fact that many of these weapons are illegally smuggled from states with laxer regulation.
Mr. McCarthy (soon) goes to Taiwan
Having vowed last year to retrace the steps of his predecessor, newly installed House Speaker Kevin McCarthy announced on Monday that he too will visit Taiwan. You’ll recall that Nancy Pelosi’s trip last August ruffled feathers and changed the status quo, prompting China to conduct live-fire military exercises near the self-governing island. McCarthy’s trip, likely this spring, is almost certain to raise tensions across the Taiwan Strait. China, which considers Taiwan a breakaway province, is concerned that visits by top-level American officials to the region are a de-facto recognition of its government as separate from China’s. The US maintains its “One China” policy, which notably does not allow for official diplomatic relations with Taiwan and recognizes the island as a part of China. Also, the 1979 Taiwan Relations Act only commits the US to helping Taiwan defend itself, although President Joe Biden has said Washington would come to Taiwan’s defense if China attacked. Support for Taiwan is seen as an important geostrategic interest and a bellwether of US credibility in upholding international commitments to its allies. But President Xi Jinping is unlikely keen to see an escalation as he grapples with a national public health crisis after abandoning China’s zero-COVID policy.
What We’re Ignoring: South American common currency buzz
Ahead of new Brazilian President Luiz Inacio "Lula" da Silva’s trip to Buenos Aires this week, he and his Argentine counterpart Alberto Fernandez made waves with a joint pledge to explore the creation of a common South American currency. If it happened, the currency bloc would be about one-third as big as the Eurozone. But there’s scant chance of South America’s two largest economies striking a common coin for the continent any time soon. For one thing, although the two countries trade a lot, Argentina lives in a near-permanent state of financial crisis and is currently struggling with an inflation rate near 95%. Would Brazil really hitch its wagon to that star? What’s more, while the politics line up nicely now under two simpatico leftist leaders, Argentina’s elections this fall could (and likely will) produce a center-right government less friendly to Lula. Brazil’s finance minister has already walked back the currency idea, saying that for now the focus will be on creating better mechanisms for financing bilateral trade.Then and Now: Colombian peace talks, Sri Lankans' anger, Macron's challenges
Three months ago: Colombia government, ELN resume peace talks
One of Gustavo Petro’s first orders of business after becoming Colombia’s president in Aug. 2022 was to bring “total peace” to the country. As a result, three months ago, his leftist government announced it was resuming talks with the National Liberation Army, a guerilla group known as ELN, for the first time since 2019. The talks were hailed as a big deal considering that the 2,400-member strong force has been at war with the government since the 1960s. The ELN was the largest guerrilla group not to sign onto a historic 2016 peace deal between the government and guerilla groups, including the Revolutionary Armed Forces of Colombia. Since then, violence by the ELN and other armed groups financing their operations through drug trafficking and illegal mining has continued to terrorize Colombians, particularly in rural areas. Last week, however, Petro, a former guerilla, announced a breakthrough, saying his government had reached a peace agreement with the ELN for a six-month ceasefire. But the ELN came out shortly after and said no deal had been reached, stating that “a unilateral government decree cannot be accepted as an agreement.” Petro, for his part, has not responded to the group’s denial. Still, communication is a good thing, and the two sides say they will continue talks this month in Mexico. Petro discussed these issues, and more, in an interview with GZERO Media.
Six months ago: Sri Lankans’ wrath boils over
The global summer of discontent – prompted partly by post-pandemic economic turmoil and aggravated by the war in Ukraine – was on full display in Sri Lanka in July, where, as we wrote here, long-simmering public wrath directed at Sri Lanka’s leader over the country’s economic collapse finally boiled over. After months of blackouts and food scarcity that forced Colombo to default on its external debt for the first time in May 2022, thousands of Sri Lankans forced the ouster of President Gotabaya Rajapaksa before storming his residence. (The photos of them swimming in the president's pool were quite something.) While Sri Lanka’s economic path remains precarious – Colombo was forced last year to limit imports to essentials – there has been some progress. In September, President Ranil Wickremesinghe reached a preliminary deal with the International Monetary Fund for a $2.9 billion bailout package after Colombo made some reforms earlier in the year, including floating the rupee. But the IMF won’t follow through until Sri Lanka restructures the billions of dollars in debt owed to three main creditors: India, China, and Japan. Talks between Colombo and all three economic powerhouses remain ongoing, but a range of issues have prevented a deal from being reached before the end of 2022, which Colombo had been aiming for.
Nine months ago: No cakewalk for Emmanuel Macron
Back in April, we reported on French incumbent Emmanuel Macron’s electoral successes – he not only won a second term as president, a mean feat in French politics, but he also kept the country’s increasingly influential anti-establishment forces, on the right and left, at bay. Still, we noted that Macron’s second term would be anything but a cakewalk, with him facing a host of thorny issues at home and abroad. Fast forward nine months and it hasn’t been smooth sailing for Macron – and things are bound to get even dicier in the weeks ahead. In parliamentary elections back in June, Macron’s Ensemble Together bloc finished 44 seats short of a majority in the National Assembly, crippling the president’s ability to easily pass legislation and giving birth to what one French publication described as a “stillborn five-year term.”
The difficulty in getting his legislative agenda through will likely to come to a head soon as Macron is pushing ahead this week with his pension reform plan, which would raise the retirement age by three years to 65 – a move unpopular with roughly 70% of French voters. While Macron can find ways to get this through parliament using emergency powers, the government is already bracing for mass public outrage comparable to strikes in 2019 against the same proposal that paralyzed the country. Still, Macron says he will move ahead with pension reform as it is central to his pledge to reduce France’s debt-to-GDP ratio. Moreover, while Paris has spent billions of dollars to subsidize electricity bills, the cap on power prices rose this month from 4% to 15%, which is bound to hurt consumers at a time when food inflation remains sky-high.
Hard Numbers: Khmer Rouge convictions, soaring Sri Lankan inflation, Japan’s Yen-tervention, “Fat Leonard” nabbed
3: After a trial that lasted more than 15 years and cost hundreds of millions of dollars, a court in Cambodia managed to convict just 3 people in connection with the large-scale massacres that the Khmer Rouge regime carried out in the 1970s.
70.2: The inflation rate in crisis-wracked Sri Lanka has now reached a whopping 70.2%. The island nation is suffering an acute dollar shortage, which makes it hard to pay for imports of food, fuel, and medicine. In July, protesters ousted the government.
25: The Japanese central bank, which has kept its interest rates ultra low even as other major banks keep hiking theirs, intervened on Wednesday to prop up the yen for the first time in 25 years. Higher interest rates generally draw in investment, which boosts the value of a currency. The yen has lost a fifth of its value against the dollar this year.
35 million: “Fat Leonard,” a fugitive US military contractor at the center of a $35 million scandal, has been nabbed by local authorities in Venezuela. Apparently he was on his way to Russia. Washington and Caracas will now negotiate the terms of his extradition to the US.
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Hard Numbers: Sri Lanka’s long road to recovery, Ukraine’s homeless, Spain’s body-positive misstep, India’s cheetah resettlement
25: Sri Lanka’s new President Ranil Wickremesinghe will reveal a 25-year road map that he says will cut public debt and bring his country back from the economic brink. Wickremesinghe will present the plan to the International Monetary Fund as Sri Lanka tries to renegotiate some of the $51 billion in foreign debt it owes.
140,000: At least 140,000 homes and residential buildings have been destroyed in Ukraine since Russia’s invasion began on Feb. 24, according to Ukraine’s Defense Ministry. Kyiv now estimates that around 3.5 million Ukrainians have been left homeless as it braces for more evacuations from the east as Russia’s onslaught continues.
3: The Spanish government's attempt at body-positive summer messaging has …. not gone well. Three British women say their images were used in the campaign – which focuses on encouraging women of different shapes and sizes to strip down at the beach – without their consent. Spain’s government said that “at no point was it aware that the women in the images were actual real people.” Okay.
16: In a journey meticulously planned by conservationists, 16 cheetahs will be flown from South Africa to India in a bid to reintroduce the species in the South Asian country more than 50 years after they became extinct there. Critics say the relocation is risky for the big cats, but conservationists say it is crucial to expanding the global cheetah population.What We're Watching: Tehran trilateral, EU food jitters, Sri Lankan presidential vote
Putin, Raisi & Erdogan in Tehran: friends with differences
Leaving the former Soviet region for the first time since he ordered the invasion of Ukraine, Russian President Vladimir Putin met in Tehran on Tuesday with his Iranian and Turkish counterparts. The conflict in Syria, where Russia and Iran are on the opposite side of Turkey, was the main item on the agenda, but little of substance was announced beyond a pledge to rid the country of terrorist groups and to meet again later this year. Importantly, Turkey’s recent threat to invade northern Syria to destroy Kurdish militant groups based there still hangs in the air — a point underscored by Recep Tayyip Erdogan’s call for Russia and Iran to be more “supportive” of Turkey’s security concerns. Still, both Moscow and Tehran have warned him against an invasion. Putin and Erdogan also failed to close the remaining gaps on a UN-backed plan to restart Ukraine’s seaborne grain exports. Lastly, while Putin and the Iranians traded shots at NATO and the West, there was no public mention of the current, fast-fading efforts to revive the long-stalled 2015 Iran nuclear deal.
EU fillets financial sanctions over food concerns
The European Union is planning on Wednesday to relax sanctions against several major Russian banks in a move to address high global food prices. Although there are no Western restrictions on Russian food or agricultural goods specifically, many global traders have avoided taking Russian cargo because the Russian banks that finance those exports are sanctioned. The news comes as Ukraine and Russia are nearing a UN-brokered deal to reopen Ukraine’s Black Sea shipping lanes for grain exports. Before Russia invaded Ukraine, the two countries were leading exporters of grain and cooking oils, and Russia was a top fertilizer exporter. The war and sanctions interrupted much of those shipments, driving up global food prices and jeopardizing the livelihoods and food security of hundreds of millions of people globally. Although global food prices have eased since hitting historic highs in May, they are still 23% higher than they were a year ago, according to the UN. For complete coverage of the global food crisis, check out our Hunger Pains project.
Sri Lankan MPs pick unpopular president
Following last week's dramatic resignation of disgraced former President Gotabaya Rajapaksa, Sri Lankan's parliament on Wednesday endorsed his unpopular chosen successor amid mass social unrest sparked by a months-long economic collapse and political crisis. Ranil Wickremesinghe, the former prime minister appointed acting president after Rajapaksa's departure, was confirmed in the top job by a majority of MPs over the little-known opposition hopeful Dullas Alahapperuma. On the one hand, Wickremesinghe has the experience to lead the country through tough times and crucial negotiations for an IMF bailout after serving — checks notes — sixstints as PM. On the other, most protesters want him out because he's considered a Rajapaksa loyalist (they even torching his private residence at the height of the popular uprising). The opposition now says they’re willing to give Wickremesinghe a chance, but the political turmoil will likely continue.
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What We're Watching: Sri Lanka swears in new leader, Bolsonaro spends big, Biden to kiss the ring
Sri Lanka has a new acting president
Gotabaya Rajapaksa finally resigned — by email — on Thursday as president of Sri Lanka, a country rocked by months-long mass protests, economic collapse, and political turmoil over his rule. He fled the country on Tuesday, likely to avoid arrest, and is now in Singapore, but Rajapaksa’s final destination remains unclear. Ranil Wickremesinghe, the sitting PM Rajapaksa appointed interim president before getting out of Dodge, was sworn in as acting president on Friday. Wickremesinghe’s ability to govern, however briefly, is uncertain given that protesters also want him out. Parliament’s process for selecting the new leader now begins, with a vote coming as early as next week. MPs will have to come up with an alternative candidate to serve out the remainder of Rajapaksa's term until 2025, or hold a snap election. Whoever becomes president will then have to pick a prime minister to lead a government that'll need to pass tough economic reforms to secure an IMF bailout, the only way Sri Lanka can salvage its ruined economy. Demonstrators ignored a new curfew to publicly celebrate Rajapaksa’s resignation overnight, and all eyes are on what happens next on the streets of Colombo.
A Bolsonaro bonus?
Brazil’s embattled far-right President Jair Bolsonaro is hoping that a massive new social spending package will boost his chances of being re-elected this fall. The country’s lower house this week approved a bill that would increase welfare payments by 50% and give special bonuses to certain workers, in particular self-employed truckers and taxi drivers. To pass the bill, lawmakers had to scrap a constitutional limit on government spending. Supporters of the bill say it’s necessary to help ordinary Brazilians cope with an inflation rate currently hovering around 12%. Critics say spending this much money will only worsen inflation, and that it’s merely a political ploy to help Bolsonaro, whose polling numbers badly trail those of his archnemesis, leftist former President Luiz Inácio Lula da Silva. The first round of the election will be held on Oct. 2.
Biden enters the kingdom
On day two of his Middle East trip, US President Joe Biden on Thursday signed a pact with Israeli PM Yair Lapid in which the US and Israel pledge to prevent Iran from developing a nuclear weapon. But each party has their own idea of how to do that. Washington is still holding out (fast fading) hopes of reviving the 2015 Iran nuclear deal, while the Israelis, skeptical of a deal, have always placed greater faith in a military deterrent. On Friday, Biden visits Palestinian Authority chief Mahmoud Abbas in the West Bank. The meeting revives US-PA ties that the Trump administration had broken off, but Biden isn’t expected to unveil any fresh vision for Middle East peace. All eyes are really now on Biden’s onward journey to Saudi Arabia, where he’ll spend two days meeting with Gulf leaders including Saudi Crown Prince Mohammed bin Salman. Biden will look to secure more Gulf oil production to bring down crude prices as well as broader Arab-Israeli cooperation against Iran. One little question with big optics: will Biden shake the hand of MBS, the man he once pledged to make into a “pariah”? Biden’s team says COVID protocols prevent him from doing so, but that hasn’t stopped him from pressing the flesh in Israel …Sri Lanka slipping into anarchy
Things have gone from bad, to worse, to outright crazy in Sri Lanka since the beginning of the year.
We warned you early on that the country would default on its huge sovereign debt, which it did in May. Since then, the economic crisis has quickly morphed into full-blown political turmoil and a social catastrophe the likes of which the region has not seen for a long time.
And there’s no easy fix.
The backstory. Thanks to the double whammy of COVID killing tourism and dismal economic policies — like banning chemical fertilizers to grow more organic food — the island nation depleted its foreign currency reserves weeks ago.
Sky-high inflation has pushed food prices through the roof and left one-quarter of Sri Lankans hungry. Life in Colombo has become a dystopian nightmare of empty schools by day and dark streets by night to save power since the country is virtually out of fuel.
Long-simmering public fury at deeply unpopular President Gotabaya Rajapaksa boiled over last weekend, when protesters occupied the presidential palace to demand his resignation. The president, from a dynasty that has dominated Sri Lankan politics for two decades, reluctantly agreed but has not been seen or heard from since.
The latest. Rajapaksa fled the country on Wednesday, and from the Maldives appointed his also-reviled PM Ranil Wickremesinghe as caretaker president. Wickremesinghe — who’d previously promised to quit himself — then declared a nationwide state of emergency, which protesters defied by storming his office. The interim leader responded by ordering the army to do "whatever's necessary" to maintain order.
We’re still waiting for Rajapaksa's official resignation letter, and no one seems to know who's really in charge.
So, what might happen next? Don’t count on a swift resolution, says Akhil Bery, director of South Asia Initiatives at the Asia Society Policy Institute.
Even if Rajapaksa and Wickremesinghe keep their promises to step down and MPs appoint successors, Bery believes a new interim government will lack a popular mandate, and be too weak and unstable to pass the tough economic reforms the IMF requires to bail out Sri Lanka. What’s more, Rajapaksa’s party controls parliament, having won a two-thirds majority in the 2020 election.
Finally, opposition leader and presidential hopeful Sajith Premadasa is also quite unpopular, and he lost big in the 2019 presidential election against Rajapaksa.
What about a coup? Bery says a military takeover — which would be Sri Lanka’s first — is unlikely because the army so far hasn’t cracked down hard on protesters. And the institutions, especially the judiciary, remain strong.
The only way out seems to be to hold a general election. But no one is talking about that, the cash-strapped government can hardly afford the cost, and the people are clearly in no mood to wait four months to vote.
The scarier and more likely scenario is continued unrest. What would that look like?
"Anarchy," predicts Bery, drawing a comparison to crisis-ridden Lebanon. "Sri Lanka has gone from having one of the highest development indicators in South Asia and being on the cusp of becoming an upper-middle-income country to [...] going backward. You could be staring at a lost generation here."
Meanwhile, the anger will keep bubbling. "There's as much frustration with the political situation and the capture of politics by the elite as there is with the economic crisis," Bery says.
"The no. 1 big political risk in South Asia is food inflation. People don't care about much, but if you can't put food on the table, that's when they take to the streets."