Beware the Lira, South Caucasus Peace, Ethiopia War, U.S-Mexico on the Rocks and the Week in Review

Blog / Weekly Review

Beware the Lira, South Caucasus Peace, Ethiopia War, U.S-Mexico on the Rocks and the Week in Review

Beware the lira. Turkey’s Finance Minister (and President Erdogan’s son-in-law) Berat Albayrak resigned via Instagram. Erdogan also fired Turkish Central Bank Governor Murat Uysal and replaced him with a former finance minister. Turkey eased curbs on foreign investors’ ability to trade the Turkish lira and Erdogan insisted that Turkey will focus on “trust and credibility” in order to make its investment environment for foreigners more predictable. The Turkish lira has rallied by about 7 percent since the beginning of the week

What it means: The expectation is now that Turkey will finally raise interest rates on November 19th. Just one small problem: Erdogan still believes interest rates are the cause of everything that ails Turkey. In his own words: “Don’t forget: interest is the cause, inflation is the result,” he said. “We will overcome this.” Perhaps Erdogan has resigned himself to the fact that Turkey needs to “swallow a bitter pill” to keep the economy from entering a downward spiral, but it is by no means a foregone conclusion.


Peace in the South Caucasus? Armenia, Azerbaijan, and Russia signed an agreement to end hostilities over the Nagorno-Karabakh region. Armenia will give up territories conquered by Azerbaijan during the fighting and 2,000 Russian peacekeepers have been deployed to keep the peace. Military casualties on both sides are expected to exceed 5,000. Armenian protesters are furious with Yerevan’s capitulation and stormed the country’s parliament, beat the speaker, and continue to protest in large numbers.

What it means: The easy takeaway from this is that Turkey is now a force to be reckoned with in the South Caucasus. Maybe, but we think most observers are missing the obvious: Russia now has troops on the ground. Turkey has tried to suggest that it will also deploy soldiers to Nagorno-Karabakh to keep the peace. Russia has said pretty clearly, “no you won’t.” Russian allies will no doubt look to the failure of Russia to come to Armenia’s aid, but in the end, Russia brokered this deal, Russia redrew the map, and now Russia is committing to keeping the peace. Turkey is a rising power in this part of the world, but Russia is still calling the shots.


Ethiopia at war. Ethiopian Prime Minister Abiy Ahmed replaced the head of intelligence, the army chief, the foreign minister, and the federal police commissioner. Ethiopian police arrested an editor of one of Ethiopia’s main newspapers. The International Red Cross has now warned of an impending humanitarian catastrophe and said the conflict had already displaced 200,000 people. At least 10,000 have sought refuge in Sudan. There are unconfirmed reports of Eritrea deploying anti-Tigray soldiers to the region and also of the Ethiopian government setting up “internment camps” to control the local population. The Ethiopian government, meanwhile, has accused retreating Tigray forces associated with the Tigray People Liberation Front (TPLF) of massacring Amhara peoples, with death tolls in the hundreds.

What it means: This is the biggest geopolitical story in the world no one is talking about. Ethiopia is a country of over 100 million people located at the Western edge of the Indo-Pacific and a 1-hour drive from the Bab el-Mandeb. At a minimum, a tragic conflict is shaping up in the Tigray region, and at maximum, the unity of the Ethiopian state is at risk. Information is still hard to get due to the government cut-off of phone and internet services in the Tigray region, and going forward, we will be watching closely to see if Ethiopia’s other diverse regions, tribes, and ethnic groups support Addis Ababa crushing the Tigray rebels, or whether they come to doubt their place in Abiy’s imaginary “Greater Ethiopia.”


Mexico-U.S. relations. Mexico sent a “diplomatic memo” to the U.S. and Mexico’s Foreign Minister called the U.S. Attorney General to voice Mexico’s disappointment at not received advanced warning into the U.S. investigation and arrest of disgraced Mexican Defense Secretary Salvador Cienfuegos Zepeda last month. Mexico’s President Andres Manuel Lopez Obrador said he would soon announce a review of all security cooperation agreements with the U.S.

What it means: Y’all: Stop worrying about when AMLO is going to congratulate President-elect Biden on his victory. He will. There are bigger fish to fry here. If you want more on the context, go back and read our initial thoughts when Cienfuegos was first arrested. If you want to be prepared for the future, start thinking about what a formal Mexican review of all security cooperation agreements with the U.S. could mean for supply chains, trade relations, and diplomatic ties between the two neighbors. AMLO is a populist headed into an important election cycle who is naturally disposed to distrust the U.S. already and just angrily exclaimed this week that “we are not a colony.”

Honorable mention

Turkmenistan unveiled a “proud and self-confident” 19-foot golden statue of the Central Asian Shepherd Dog (the Alabay), fit with an LED screen showing video footage of the dog in various situations. In impeccable understatement, the BBC reports that “it’s unclear how much the statue cost.” A whole range of golden retriever puns are now available to us all. You’re welcome.

Vietnam’s Communist Party (CPV) Politburo said it had issued an official warning to former State Bank Governor Nguyen Van Binh over corruption and incompetence.

The European Union announced it is placing new tariffs on $4 billion worth of U.S. goods and services.

The U.S. government appears to have forgotten about its ban on TikTok.

The Regional Comprehensive Economic Partnership (RCEP) trade deal is set to be signed on Sunday.

Representatives of Libya’s Government of National Accord and the Libyan National Army agreed to hold elections within 18 months in the civil war-stricken country.

Now former Peruvian President Martin Vizcarra was impeached by Peru’s Congress. Thank u, next.

Hungarian Prime Minister Viktor Orban’s government passed a new state of emergency law and is also proposing changes to electoral laws and judicial appointments.

The U.S. is preparing additional sanctions against insurance companies and technical certification companies working on the Nord Stream 2 project.

Saudi energy minister Prince Abdulaziz bin Salman hinted that OPEC+ might cut oil production even further at a meeting scheduled for the end of the month.

China is offering to pull back its troops in the Ladakh region.