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Chaos in Kazakhstan, Indonesia Turns Protectionist, Turkish Inflation, Oil, and the Week in Review

Blog / Weekly Review

Chaos in Kazakhstan, Indonesia Turns Protectionist, Turkish Inflation, Oil, and the Week in Review

Well, 2022 sure isn’t wasting any time, is it? Before we get to our usual run-down of all things geopolitical this week, a reminder to check out our podcast with Maurice Chammah on his book about the death penalty in the U.S. We’ve also got a Russian analyst lined up for an episode on Monday, which is not to be missed considering everything happening in Ukraine and Kazakhstan this week. Hope y’all are staying safe and healthy – take care and see you out there.

Chaos in Kazakhstan. Kazakhstan’s cabinet resigned in response to mass protests throughout the country. Dozens of Kazakh security forces died in clashes with protesters, who even torched state buildings and seized Almaty international airport. The Russian-led Collective Security Treaty Organization deployed soldiers to Kazakhstan to quell the unrest at the latter’s request. President Kassym-Jomart Tokayev removed former president Nursultan Nazarbayev from the Security Committee.

What it means: Three things to note. 1) Nazarbayev “stepped down” in 2019 but has been ruling behind the scenes with Tokayev as his puppet. Now Tokayev is removing Nazarbayev from his position on the Security Council – in technical terms, that’s a BFD. 2) While protests seemed to spare Kazakh oil and gas production at the start, as we are writing this, reports of companies like Chevron reducing production expectation due to disruptions linked to the protests are starting to emerge. 3) Can Russia really consider offensive action in Ukraine when it has this dumpster fire to deal with at the same time? Next week’s Russia-U.S.-NATO security talks should be very interesting. 

Indonesia turns protectionist. Indonesia banned coal exports for January due to concerns over low supply at domestic power plans. Japan called for Indonesia to revoke the ban on Wednesday. Indonesian coal miners are seeking an exemption from the export ban but talks scheduled for Wednesday were postponed and there is no timeline for their resumption.

What it means: Japan, China, and South Korea accounted for 73 percent of Indonesian coal exports last year. Note the protectionist turn in the supposedly business-friendly Indonesian government – and watch for more potential price spikes and energy shortfalls in East Asia amid freezing temperatures across all three major importers of Indonesian coal.

Turkish inflation. According to the Turkish Statistical Institute, Turkey’s Consumer Price Index increased to 36.08 percent in December – up from 21.31 percent in November. Turkish Finance Minister Nureddin Nebati promised to “introduce new instruments to support production-focused, manufacturing and export-oriented companies.” The Turkish government and Erdoğan’s AK Party proposed a new law that would allow the government to issue new bonds to compensate banks for losses from lira deposits linked to foreign-exchange rates.

What it means: One doesn’t need to know anything about economics to know that inflation rates surpassing your approval ratings is not a great thing if you’re a politician. If Erdoğan can’t get a handle on the situation soon, it is hard for us to imagine how he remains in power for much longer.

Who said something about oil? OPEC+ agreed to boost production by 400,000 barrels per day as planned in February. The International Energy Agency, however, noted that OPEC+ was missing previous production targets by up to 650,000 bpd, due in part to lower-than-expected production in Nigeria, Angola, and Libya, as well as stagnant production in Russia. Nigerian production is 360,000 bpd below its quota alone.

What it means: Between this week’s drama in Kazakhstan and an uptick in Iran-backed militia attacks on Iraqi targets, we’re wondering if OPEC can hit past quotas, let alone boost production by 400,000 bpd by February. In addition, the extent of Nigeria’s paltry production is impressive – even for Nigeria. 

Extra! Extra!

Drought isn’t stopping piranhas from killing people in Paraguay.

A South African judicial inquiry into government corruption released a scathing report, accusing former President Jacob Zuma of presiding over “a scarcely believable picture of rampant corruption.”

Egypt announced it is reviving the Toshka project – an audacious plan launched in the 1990s by former President-dictator Hosni Mubarak to create a new delta in the middle of the desert.

China and Morocco signed an agreement to implement the Belt and Road Initiative in the country.

Gunmen attempted – unsuccessfully – to assassinate Haitian Prime Minister Ariel Henry on Saturday.

Chinese Premier Li Keqiang said the Chinese government will “intensify efforts to provide general transfer payments to local authorities to make up for possible funding gaps at the local level.”

Australia and Japan signed a Reciprocal Access Agreement.

China, France, Russia, the UK, and the U.S. released a joint statement advocating nuclear non-proliferation.