​WEEK OF 11/5/2018

​The Middle East 

Iran：U.S. sanctions against Iran will take effect on November 5. Some of Iran’s top customers, such as China and Turkey, are resisting Washington’s call to end purchases outright, arguing there are not sufficient supplies worldwide to replace them. The U.S. sanctions are meant to cripple Iran’s oil-dependent economy and to quash not only its nuclear ambitions, its ballistic missile program, and its influence in Syria. It is believed that Trump is considering offering concessions to China and Turkey. These concessions would allow China and Turkey to continue purchasing Iranian oil until Russia and Saudi Arabia increased oil production enough to satisfy demands from China and Turkey.

At the same time, newly elected Brazilian President Jair Bolsonaro said that he will move Brazil’s embassy in Israel to Jerusalem. Bolsonaro also said he would shut down the Palestinian embassy in Brazil. Moving the embassy to Jerusalem would potentially increase Bolsonaro’s support among Brazilian Christian evangelicals. It would also increase Brazilian ties with Israel and the United States. Israel is discussing the prospects of establishing rail lines that would connect Israel to several of its Arab neighbors including Jordan, Saudi Arabia, and Oman. These rail lines would help to normalize relations between Israel and numerous Arab countries.
Things to watch: U.S. sanctions’ effectiveness, whether Brazil will carry out the plan, Oman’s recognition of the action.

Sources:
https://www.bbc.com/news/world-europe-46043404
https://www.reuters.com/article/us-iran-nuclear-oil/trumps-sanctions-on-iran-tested-by-oil-thirsty-china-india-idUSKCN1N30GW
https://www.theepochtimes.com/new-brazilian-president-says-hell-move-embassy-in-israel-to-jerusalem_2702644.html

Hong Kong, Macau, Taiwan

In this week, Jair Bolsonaro won Brazil's presidential election who had shown friendly leanings to Taiwan earlier this year. He was the first presidential candidate breaking the convention to visit Taiwan. His former friendly attitude to Taiwan may influence future direction of Brazil's foreign policy. Tsai Ing-wen had spoke with King Mswati III of Kingdom of eSwatini (Swaziland) by telephone, while Tsai does not often announce updates on engagement with allies. But by assuring the positive relationship with Swaziland, Tsai may intend to further boost support for her pro-independence Democratic Progressive Party, especially at weeks before Taiwanese local elections of 2018 which will take place in November. The Director of American Institute in Taiwan (AIT), Brent Christensen, said on Wednesday that "any effort to determine Taiwan's future by other than peaceful means...is of grave concern to the United States." It can be viewed as a broad strategy of US to support Taiwan maintaining its sufficient self-defense capabilities. This might further heighten cross-strait tensions.

Meanwhile, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor will attend the panel to hear Hong Kong National Party's leader Andy Chan Ho-tin's appeal. Hong Kong National Party is a pro-independence party that was banned in September. The attendance of Lam can be a sign of Hong Kong government's determination to suppress advocacy of independence and to uphold national sovereignty.


Things to watch: Further actions Tsai may take to strengthen Taiwan’s international position, Beijing’s reaction, Taiwanese local elections of 2018.

Sources:
http://www.taipeitimes.com/News/editorials/archives/2018/10/29/2003703230
http://focustaiwan.tw/news/aipl/201810290015.aspx
https://www.reuters.com/article/us-taiwan-diplomacy/us-says-gravely-concerned-by-any-non-peaceful-means-of-deciding-taiwans-future-idUSKCN1N50AF


China-US

On Monday, the United States restricted exports to a state-backed Chinese that makes semiconductors. The US Commerce Department said Fujian Jinhua Integrated Circuit Company would not be able to buy components from American companies without a special license. The US sees China as a strong opponent in the high-tech area, and it fears China exceeds the US in this area. This move by the US will undermine the Chinese high-tech development, especially semiconductor area,  but on the other hand, it would push Chinese semiconductor companies to seek self-breakthrough and stop their reliance on the US.
As the trade conflicts keep escalating between China and the US. On Tuesday, the Chinese central bank set the dollar’s reference rate at 6.9574 yuan, putting the Chinese currency at its weakest since May 2008. The yuan slid to a decade low once mainland trading started 15 minutes later, with one dollar buying as many as 6.9724 yuan, according to Wind. The devaluation would likely to remain control under the central bank and not exceed the exchange rate of 7, which because there is the concern of capital flight if the yuan devalues too much.
President Xi had a long conversation with President Trump by telephone on Thursday. Two presidents talked about various subjects, including current trading disputes and issues of the Korean Peninsula. The conversation also confirmed the meeting between two presidents at the G20 summit in Argentina. This discussion is significant but more of a signal that shows China and the US are willing to move on and have talks on the trading conflicts.

Things to watch: Chinese high-tech companies’ future, Yuan’s value and the Chinese central bank’s further actions, President Xi and President Trump’s G20 meeting.

Sources:
https://www.wsj.com/articles/china-sets-official-yuan-rate-at-weakest-since-2008-1540880494
https://www.cnn.com/2018/10/29/tech/us-export-ban-fujian-jinhua/index.html
https://www.wsj.com/articles/trump-signals-progress-on-trade-after-phone-call-with-chinese-president-xi-1541083811?mod=searchresults&page=3&pos=1


Europe

Regarding the latest Brexit negotiation, the UK and the EU have agreed on a tentative deal for UK financial services, securing the future of “City of London” after the Brexit. The EU would recognize the legal, regulatory, and supervisory regime of City of London is good as its own based on Time’s report. Singapore and United States also used such method to sell its financial services to the EU single market. Due to such compromise, the value of pound increase one percent. The financial industry is one of the most prosperous and vibrant industries in UK, and many worry that Brexit would make UK financial institutions losing their advantage in the EU. If such agreement is believed to be true, the finance sector of UK holds its advantage even Brexit becomes reality. However, the EU senior officer and chief negotiator Michel Barnier states that such “report” is subjectively misleading and does not fit the truth.

On military development in Europe,  French Minister of National Defense Florence Parly announced that France is planning to build a new aircraft carrier, replacing the twenty-five-year-old de Gaulle aircraft carrier. Such new aircraft carrier would serve its duty until 2080, and it is cable of carrying the new generation jet fighters. Russia is already constructing its nuclear power aircraft carriers.The new French aircraft carrier will replace the old de Gaulle as the new national symbol of France. Besides the United States, France is the only state that has a nuclear power driven aircraft carrier. Moreover, such carrier would also help the French to secure its territories and economic freedom of movement over the Caribbean, South America, the Indian Ocean, and the Pacific. Although a carrier does not make a “navy,” such a powerful weapon symbolizes the idea of French still wanting to be a significant global power.    
Things to watch: EU tentative negotiation and French future military progress. 

Sources:
https://nationalinterest.org/blog/buzz/real-reason-france-wants-new-aircraft-carrier-34747
https://www.businessinsider.com/city-of-london-eu-uk-brexit-negotiators-agree-financial-services-deal-2018-11


Korean Peninsula

On Monday, South Korea’s Yonhap News Agency confirmed that the US Secretary of State Mike Pompeo was going to meet North Korean delegations to talk about the further details of denuclearization and the potential visit of President Trump. Considering the disagreement between the US and North Korea on denuclearization, any kind of talk will be helpful for them to strengthen communications and coordination, as well as to make positive progress on denuclearization. Furthermore, the potential visit of President Trump can also help both sides to normalize their relationship. Two days later, North Korea also announced that its Punggye-ri nuclear test site is prepared for international inspectors. It is another clear sign that indicates North Korea’s determination.

South Korea was not involved in those activities mentioned above, because they were dealing with the problems left over from the WWII with Japan. The South Korean top court ordered a Japanese company to compensate for four South Koreans who had been forced to work by Japanese during WWII. Although the relationship between the two countries might be affected, South Korea is still not going to compromise on the issues that are related to Japan’s war crime.

Things to watch: Further agreement between North Korea and the US on denuclearization; whether the strained relationship between Korea and Japan will affect the condition of Korean Peninsula.

Sources:
​https://www.aljazeera.com/news/2018/10/south-korea-court-orders-japan-firm-compensate-wwii-slaves-181030055115538.html
https://www.voanews.com/a/report-pompeo-to-meet-with-north-korean-counterpart-next-week/4634295.html
https://www.aljazeera.com/news/2018/10/north-korea-prepares-nuclear-test-site-inspectors-181031034133033.html
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