Capitol Putsch, Strengthening Yuan, South Korea Deploys, Saudi Arabia Recalibrates and the Week in Review

Blog / Weekly Review

Capitol Putsch, Strengthening Yuan, South Korea Deploys, Saudi Arabia Recalibrates and the Week in Review

The “Capitol Putsch.” Terrorists stormed the U. S. Capitol building, temporarily delaying Congressional certification of November’s elections results. According to a YouGov poll, 21 percent of registered voters supported what happened in DC yesterday, and more disturbingly, 35 percent believe enough fraud took place at the presidential election to change the outcome. Both Democratic candidates for the Senate won their run-off elections, which means a 50-50 tie in the Senate and Vice President Kamala Harris holding the tie-breaking vote.

What it means: What happened at the Capitol yesterday was a national disgrace. And yet, in the grand scheme of things, the people who stormed the Capitol represent a fringe of society. To the extent it was an attempt at a coup, it failed – and failed spectacularly. The institutions of the U.S. proved resilient. (Keep reading, this is where the silver lining ends.)

The Trump phenomenon has always depended on the loyal support of a motivated base, and that base got even smaller on Wednesday. That does not mean Trump-ism is going away, by any means. We wouldn’t be surprised by the emergence of a third party (inevitably called “The Trump Party”) that might make the 2024 presidential election look more like those in 1968 or even 1948. There are already rumors Ivanka is contemplating a run at a Senate seat in Florida. Even so, this may be the “bottom” of Trump-ism.

What is far more disturbing are the results of the YouGov poll on what is happening in the U.S. Just 21 percent of registered voters said they approved of what took place on Wednesday – but 35 percent said they believe sufficient fraud took place during the presidential election so as to change the outcome, and an additional 20 percent believe there was fraud in general. In other words, more than half of Americans are doubting the legitimacy and efficacy of elections. Polls are inherently imperfect, and this is obviously just one result, but even so, that figure is shocking and disturbing. It is one thing for a mob to storm the Capitol – it’s quite another if the majority of U.S. voters don’t trust the legitimacy of their election outcomes.

Probably most of you haven’t heard the German word “Dolchstoßlegende,” but for us history nerds, it is the first word that comes to mind. It means “stab-in-the-back-myth,” and describes the conspiracy theory propagated by famous German World War I General Erich Ludendorff (yes, the villain from Wonder Woman) that Germany lost the war because it had been betrayed by its government. Ludendorff even ran for President of Germany in 1925 on a Nazi Party/Völkisch Party coalition ticket (and only got 1.1 percent of the vote). Adolf Hitler exploited the stab-in-the-back myth during his rise to power, and without the widespread lack of faith in German political institutions, Hitler might have been consigned to a much smaller role in the dustbin of history.

None of this is to say that is what is going to happen: the “reductor ad Hitlerum” is used far too often, in our opinion. It is simply to point out that the Capitol Putsch and the end of the Trump presidency are overshadowing the bigger story: the widespread embrace of the notion that U.S. elections are fraudulent. We should not underestimate the damage this idea can and is doing to the fabric of U.S. democracy, nor the scope of the task ahead of us to heal these wounds.

The strengthening of the yuan. The People’s Bank of China announced new rules that will ease restrictions on cross-border yuan use effective February 4. The yuan continues to strengthen, hovering around 6.45 to the dollar.

What it means: The immediate goal of the reforms seems to be relieving pressure on the yuan while allowing Chinese investors to buy foreign currency by selling yuan. But it is the long-term goals that interest us more. China is not intervening to keep the yuan weak and is also pushing for greater international circulation of the yuan even as the yuan’s strength eats into the bottom-line of Chinese exporting companies.

South Korea deploys. Islamic Revolutionary Guards Corps forces seized a tanker owned by a South Korean company for what it claimed was a “purely technical issue.” South Korea dispatched both a diplomat and a destroyer currently deployed with a South Korean anti-piracy unit to the Strait of Hormuz.

What it means: Last week was the first time in 35 years the U.S. did not import a single barrel of oil from Saudi Arabia.

What does that have to do with South Korea and Iran, you may be asking yourself. Everything! U.S. oil imports from foreign countries, especially those not named “Canada,” have been declining for years. In 2019, foreign countries accounted for just 3.3 percent of average U.S. consumption. The opposite story is true for Japan, South Korea, India, China, and other gas-guzzling Asian economies. South Korea relies almost entirely on imports for its crude supplies and it is hardly the exception. Expect to see a lot more Asian diplomacy and military force in the Middle East – and expect to see a lot less of the U.S. there too.

Saudi Arabia recalibrates. Saudi Arabia will unilaterally cut oil production by 1 million barrels per day (bpd). Saudi Arabia also agreed to reopen its air, land, and sea borders with Qatar.

What it means: Saudi Arabia knows the next occupant of the White House won’t be nearly as friendly to Riyadh’s interests. That is why Saudi Arabia has held off on normalizing ties with Israel, reportedly saving the street cred for such a move for Biden. It is also why Saudi Arabia is essentially admitting its anti-Qatar blockade failed and preparing for a likely resumption of the oil price war with Russia that had just started when COVID-19 struck last March. Keep an eye on Riyadh in the coming weeks and months – they likely aren’t done recalibrating their foreign policy.

Honorable Mention

An off-duty Israeli police officer apprehended a man who was attempting to steal 1,500 pounds of avocados from a kibbutz.

Sea turtles are enjoying Turkish beaches.

Jack Ma hasn’t been seen in a while. We wouldn’t worry too much about it. He’s probably just chillin.

The German state of Mecklenburg-Vorpommern is setting up a public sector climate foundation to shield companies involved in Nord Stream 2 from U.S. sanctions.

British Prime Minister Boris Johnson said Scotland should not be allowed to hold a second independence referendum “until 2055.”

Argentina legalized abortion.

Argentina temporarily suspended export licenses for corn set to ship before March 1 to “maintain adequate domestic animal-feed supply.”

Iran began enriching uranium to 20 percent purity.

Total suspended construction work at its LNG project in Mozambique after Islamist militants attacked Mozambican security forces near a Total installation.