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Andes Rail, Netanyahu, Congo, US-Mexico, the Queen’s Navy and the Week in Review

Blog / Weekly Review

Andes Rail, Netanyahu, Congo, US-Mexico, the Queen’s Navy and the Week in Review

Happy Friday! A few housekeeping notes before we get to the Week in Review:

First of all, if you have already signed up for our Latin America newsletter, thank you so much. If you haven’t, head on over to latampolitik.com and check it out. Aside from getting crucial insights on geopolitical developments in Latin America delivered to your inbox three times a week – who wouldn’t want more Perch in their lives? – signing up for the newsletter or sharing it with your friends is an amazing way to support us if you’re an individual who likes what we do but doesn’t have the resources for a full-on consulting arrangement. You can sign up for a two-week trial in either English or Spanish. ¡Mucho amor y gracias!

Also: If you missed our podcast with futurist Garry Golden on cryptocurrency earlier this week, you can listen by clicking here or read the transcript by clicking here [The Perch Pod Episode 30 – Gary Golden on Cryptocurrency, Decentralized Finance and Cardano] This particular episode has received over double the number of listens we average when we release a podcast, so obviously it’s a good one, and an easy-to-digest primer on what the frack crypto actually is. As always, feel free to share with your friends, and if you want to talk about geopolitics and crypto and how it affects your business and/or investments, hit us up – info@perchperspectives.com.

Last but not least: British election results weren’t in by the time we typed this up. So you’ll have to wait until next week for our thoughts on what they mean for the UK – and Scotland in particular. (Or you can always email us and get our thoughts sooner!)

Make it rain, keep it safe, and take it easy. xxx – PERCH

A Railroad to the Andes. Chile and Bolivia restarted the famous Arica to La Paz rail line after 16 tears of repairs. Chile is reportedly sending steel to Bolivia; Bolivia will send back soybeans to Chile for eventual export.

What it means: Well, first of all, it means we wanted to share one of our favorite stories from the LatamPolitik newsletter since we launched it. That’s because this story is what geopolitics is all about. You see, Chile fought a war against Bolivia and Peru back in the 1880s. Chile kicked Bolivia and Peru’s collective butts and took all of Bolivia’s coastal territory, offering in return to build one of the most challenging rail lines in the world, rising from sea level to a maximum height of 13,800 feet in the Andes. The railroad has been in a state of disrepair for 16 years due to flooding, neglect, and time, but now both Chile and Bolivia have an interest in reintegrating their economies and getting the rail cars moving again – Chile because it aspires to regional political and economic influence, and Bolivia because it wants to export its wares abroad. Come on; ride the train.

Netanyahu’s nine lives. Israeli Prime Minister Benjamin Netanyahu failed to form a government. Israeli President Reuven Rivlin tasked centrist Yair Lapid to try instead. Lapid now has 28 days to form a government. Naftali Bennett, head of Yamina (which means, “To the right!”) and erstwhile Netanyahu ally, is trying to push his part to jump into a unity government with Lapid but is already facing defections from his religious-nationalist colleagues at the mere suggestion.

What it means: This is a political setback for Netanyahu, no doubt. On the road to becoming Israel’s longest-serving Prime Minister, Netanyahu has continually snatched victory from the jaws of defeat, due in large part to the fact that demographics simply give him a leg-up on forming a coalition as compared to any of his rivals. Perhaps Lapid and Bennett will be able to form a unity government, but considering the ideological diversity involved, even if they are, it is unlikely to last long. The most important and interesting question for Israel’s future is if/when a government coalition will decide to work with Israel’s Arab political parties. Probably not anytime soon – which is why we are most headed for yet another round of elections in the Holy Land. If Lapid and Bennett really want to push Netanyahu into the opposition, they’ll need to think outside the box.

Trouble in the DRC. Democratic Republic of Congo (DRC) President Felix Tshisekedi declared a state of siege for 30 days in the provinces of North Kivua and Ituri. Provincial governments will be replaced by DRC military forces or national police for the duration of the siege as the DRC government attempts to put an end to increasingly violent attacks by militias in the area.

What it means: To be honest, we’re not 100 percent sure yet – but what we know so far makes us nervous. The violence and instability in these provinces are indisputable – but these regions also happen to be governed by prominent opposition voices that have criticized Tshisekedi in the past. There are obvious implications for regions that produce gold, tin, and copper, but we’re more concerned that this means something deeper is brewing underneath the surface in the DRC. Remember: sub-Saharan Africa is one of the three key regions of the world (along with Central Asia and Latin America) that will be most affected by geopolitics in the decade ahead, so we’ll be keeping a close eye on this story as it progresses, and you should too.

Mexico-U.S. relations. The U.S. complained that cooperation between the law enforcement agencies and militaries of Mexico and the U.S. was suffering from “a lack of engagement” and constituted a national security crisis for the U.S.

What it means: In December, we wrote a long newsletter post about why we thought U.S.-Mexico relations were heading in the wrong direction. As we wrote then: “With Trump on his way out, and with AMLO considering his political future, Mexico City appears to be attempting to reset its relationship with Washington and to prevent “a history of actions that violate the sovereignty of [Mexico] by foreign agencies” from continuing in the future.

Things have gone a bit better than we initially feared so far – Mexico and the U.S. have managed to cooperate on migration decently well, for instance. But underneath the surface, the U.S. and Mexico seem to be moving in opposite directions, and between the breakdown in security cooperation and ongoing trade spats, we are advising our clients to prepare themselves for elevated risks, especially in the immediate aftermath of the June 6th legislative elections.

Rulers of the Queen’s Navy! French fishing boats staged a protest outside the port of St Helier on the British-controlled island of Jersey. (Here’s a map.) French government officials are angry because they think Jersey has been dragging its feet on approving fishing licenses to French fishing vessels to operate in the area in contravention of the EU-UK Brexit deal. The disagreement became so tense this week that both the UK and France deployed naval assets to the region while talks between Jersey officials and French fishermen are ongoing.

What it means: What century are we in? The UK and France deploying military assets to defend divergent interests in the English Channel sounds like something out of a 19th-century history book, not a pithy 2021 geopolitics newsletter. Don’t lose too much sleep over this particular incident – we’d expect this spat to be resolved sooner rather than later – but don’t dismiss it either. It’s foreshadowing the kinds of tensions and disruptions you should be expecting in global supply chains and trade in the years ahead.

 

Honorable mention  

The Venezuelan government presented U.S. former movie star and current Russian special envoy to the U.S. Steven Seagal with an electric guitar; in return, Seagal gave Venezuelan President Nicolás Maduro a samurai sword. No, this isn’t a joke, that happened. Here’s a picture.

The Philippines’ Foreign Minister apologized after calling China an “ugly oaf” and telling China to “get the f*** out of Philippine waters.” (Pardon his French.)

The European Union and India will relaunch negotiations over a comprehensive free trade agreement (FTA).

New Zealand’s parliament condemned Chinese human rights abuses against its ethnic Muslim Uighur population but stopped short of calling China’s policies a “genocide.”

The foreign ministers of Japan, the U.S., and South Korea met on Wednesday and affirmed close coordination to achieve complete denuclearization of North Korea.

U.S.-Iran negotiations over returning to the Iran nuclear deal are reportedly hitting a major snag over what will happen to advanced centrifuges Iran has installed since 2015.

U.S. Secretary of State Antony Blinken traveled to Ukraine, promising that the U.S. would “stand strongly” with Ukraine and warning Russia to cease its “reckless and aggressive actions.”

It has been a bloody and tumultuous week in Colombia, where protests against the Duque’s government’s controversial tax reform turned violent, killing at least 20 people so far as of the time of this writing and leading to the firing of “El Ministro de Hacienda” Alberto Carrasquilla. More here.

El Salvador’s newly minted Legislative Assembly held its first session and voted by a 64-19 margin to remove the magistrates of the constitutional chamber of the Supreme Court. U.S. Vice-President Kamala Harris – Biden’s handpicked envoy to Central America – tweeted about her “deep concerns” for El Salvador’s democracy.

The European Commission identified 137 key products, representing 6 percent of EU GDP, upon which the EU is “highly dependent” and where access is uncertain.

South Africa’s governing African National Congress (ANC) suspended its Secretary General, Ace Magashule after he was charged with corruption. Magashule rejected the decision and wrote a letter to South African President Cyril Ramaphosa suspending him from the ANC in return.

 END