What We're Watching: Brexit Drags on, Argentina Clamps down, Germany’s Center Holds

What We're Watching: Brexit Drags on, Argentina Clamps down, Germany’s Center Holds

Brexit lurches forward — However tired you are of reading about the long-running-but-never-moving Brexit saga, we here at Signal are equally (if not more) tired of writing about it. But this week will deliver some genuine drama as parliamentary opponents of UK Prime Minister Boris Johnson's no-deal Brexit gambit (a move he hopes will force the EU back to the negotiation table) attempt to pass legislation preventing the country from crashing out of the European Union on October 31. Time is short, as the Boris-backed parliament suspension kicks in next week. Boris has already threatened to call a general election on October 14 should MPs prove successful in passing a bill that forces him to seek an extension from Brussels in the face of no-deal. Even if the legislation doesn't pass, MPs can attempt to trigger elections themselves via a vote of no confidence. To paraphrase another famous Brit, this may be the beginning of the end, or it could be the end of the beginning. We'll be watching this week to see which of the two it is.

Argentina clamps down — Last week, Argentina said it would put off paying back $101 billion in country debt, a move that some (including the ratings agency Standard and Poor's) branded a default on the country's debts. On Sunday, Buenos Aires instituted capital controls to stem the country's worsening economic and financial crisis. While the immediate cause of the economic tumult was the surprise defeat of business-friendly President Mauricio Macri to his populist opponent in primary elections last month, Argentina's problems go deeper: over the past 12 months, more than 3 million people have slipped into poverty. We're watching to see how much worse the situation gets ahead of Argentina's October elections, when investors' fear of a populist assuming looks likely to become a reality.

Germany's battered center holds — The country's mainstream political parties beat back the right-wing Alternative for Germany (AfD) in two state elections in the former East Germany on Sunday, but it wasn't pretty. In Brandenburg, the state that surrounds Berlin, the anti-immigrant AfD came in second to the center-left Social Democrats (SPD) with 23.5 percent of the vote, nearly doubling its showing from 2014. In Saxony, along the Polish border, the AfD almost tripled its vote share to 27.5 percent, around 5 percentage points behind Angela Merkel's center-right Christian Democrats (CDU). While the AfD performed worse than Germany's two long-dominant parties had feared, the result shows the power of AfD's populist message in a region that suffered a massive exodus of young workers after the fall of the Berlin Wall 30 years ago. It will also complicate the process of building governing coalitions in both states. We're watching to see how the "grand coalition" between the CDU and SPD weathers this new, more fractious era in German politics.

What We're Ignoring:

Putin and Abe ending WWII Dignitaries assembled in Poland last weekend to mark the 80th anniversary of World War Two. Missing from the gathering: Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe, whose countries never signed a peace treaty after the war and continue to press competing claims over a series of islands that lie between them. The pair will discuss the islands' status at a meeting in Vladivostok, in Russia's far east, later this week on the sidelines of the Eastern Economic Forum. But the two have held more than 25 bilateral meetings over the course of their tenures, and have yet to reach a breakthrough on the impasse. We're ignoring this story, because if there were serious prospects for officially ending the bloodiest conflict the world has ever seen, it's (probably) not going to happen at a side meeting at an economic conference.
People working at computers in a room labeled Malware Lab

Microsoft observed destructive malware in systems belonging to several Ukrainian government agencies and organizations that work closely with the Ukrainian government. The Microsoft Threat Intelligence Center (MSTIC) published a technical blog post detailing Microsoft’s ongoing investigation and how the security community can detect and defend against this malware. Microsoft shared this information over the weekend to help others in the cybersecurity community look out for and defend against these attacks. To read more visit Microsoft On the Issues.

Ian Bremmer's Quick Take: Hi everybody. Happy Tuesday after the long weekend for those of us that had a long weekend. I thought I would kick us off with the first major foreign policy crisis of the Biden administration. And that is of course, Russia-Ukraine. Afghanistan, of course, was a debacle, but not exactly a global crisis. This of course has the potential to really change the way we think about European security and about US relations with the other major nuclear power in the world. So, I would say that the level of concern is even higher and there are a lot of things we can say.
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The looming pandemic debt cliff

Right on the buzzer, Sri Lanka on Tuesday narrowly avoided its first-ever default on its sovereign debt. But the cash-strapped country is still on the hook for a lot more cash this year, which is shaping up to be a very painful one for low-income countries deep in the red due to COVID.

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The Graphic Truth: Deep in the red with China

The pandemic has thrown many already-indebted countries further into the red. The problem is two-pronged for many Asian, African, and Latin American countries. They have taken on huge amounts of debt from the IMF to weather pandemic-related economic uncertainty, while also being caught up in a debt trap set by China, which funds large infrastructure projects in developing states but often with complex or misleading fine print. We take a look at which countries out of a group of 24 surveyed states owe China the most compared to their respective IMF debts.

Ukrainian former President Petro Poroshenko gestures as he walks to address supporters upon arrival at Zhulyany airport in Kyiv, Ukraine January 17, 2022.

Ukraine’s political woes. While Russia maintains tens of thousands of troops on the Ukrainian border, domestic politics in Kyiv are becoming increasingly contentious. This week, former President Petro Poroshenko – who was elected in 2014 after the Maidan Revolution ousted a longtime Putin ally and then defeated for re-election in 2019 – has now returned to Ukraine after a month abroad to face a host of criminal charges. Those charges include treason, an alleged crime related to his decision to sign government contracts to buy coal from mines held by Russian separatists in eastern Ukraine in 2014. Poronshenko, a businessman worth $1.6 billion, says the deal was necessary to keep Ukraine from economic collapse and that the charges are an attempt by current President Volodomyr Zelensky to distract from unfavorable perceptions of the country’s (currently lousy) economic outlook. He also calls it a manufactured crisis and a “gift” to the Kremlin, because it distracts from Russia’s ongoing aggression.

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The Taliban’s never-ending crisis

Afghanistan has now become what the UN is labeling the planet’s worst humanitarian disaster. Indeed, last week the world body issued its largest-ever donor appeal for a single country to battle the worsening crisis there, caused by freezing temperatures, frozen assets, and the cold reception the Taliban have received from the international community since they took over last summer.

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A newborn baby is seen being cared for in the ward of the hospital neonatal care center. The results of the seventh national census of China will be released soon, and some institutions predict that the birth rate will be lower than the death rate for the first time.

7.52: Birth rates in China dropped to a record low 7.52 per 1,000 people in 2021, down from 10.41 in 2019. This comes as the Chinese Communist Party is trying very hard to boost birth rates to revive a slowing economy.

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China’s homegrown COVID vaccines were once crucial — but they're not as effective against omicron as mRNA jabs.

What's more, with with local cases near zero for the better part of the pandemic, most Chinese have no natural immunity. That could spell disaster for Beijing as omicron surges.

Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations, warns that the highly transmissible new variant will make zero COVID harder and harder to sustain.

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