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Chilean Love, Food Prices, Israeli Bedfellows, Softer China, and the Week in Review

Blog / Weekly Review

Chilean Love, Food Prices, Israeli Bedfellows, Softer China, and the Week in Review

Happy Friday, friends. Exciting news: we have a podcast page! So you can check out our most recent podcast with Russian analyst Andrey Sushentsov or download the transcript by clicking here. Our Latin America-themed newsletter LatamPolitik is still going strong and it is a huge weekend in Latin America this weekend, with legislative elections in Mexico and Presidential elections in Peru. Check it out and sign up for your free trial by clicking here. As always, if you want to get in touch for any reason at all, reply to this email, or drop us a note at info@perchperspectives.com

Love is love. Chilean President Sebastián Piñera threw his support behind a long-stalled bill in Chile’s Congress that would establish equal marriage for Chileans, regardless of the gender of their partner. The legislation was initially introduced in 2017 by left-leaning former President Michelle Bachelet. Piñera also made a much broader appeal during his annual state of the union address, exhorting Chileans to “talk and listen to each other” and to abandon “the politics of the trenches.”

What it means: As usual, we’re leading off with a Latin America story to whet your appetite for LatamPolitik. Piñera is a politician, one who just got handily trounced in an election to select the writers of Chile’s new constitution and whose approval ratings have been hovering around the single digits. Piñera’s conciliatory about-face is an attempt to change the conversation from the pension withdrawal debacle and his government’s management of the pandemic. This story is also, however, a revealing bellwether for the relationship between Church and State in Chile, and the region at large.

Food prices. The UN’s Food Price Index averaged 127.1 points in May 2021, 5.8 points (4.8 percent) higher than in April and as much as 36.1 points (39.7 percent) above the same period last year. Brazil’s JBS – the world’s largest meatpacker – suspended operations at all U.S. and Australian plants earlier this week due to an alleged cyberattack. Extreme temperatures and wildfire watches came to the U.S. Midwest this week, with temperatures in the high 90s and low 100s°F in parts of North Dakota, Montana, and northern Minnesota. Brazil’s National Meteorology System (SNM) declared the current drought the worst drought in 111 years – which is how long the SNM has existed.

What it means: If you’ve been reading Perch newsletters since last year, you’ll know that we have been warning about rising food prices for almost a year now. Prices are now almost as high as they were in late 2010. You might also recall that was the year that Tunisian vegetable and fruit vendor lit himself on fire in part because of rising food prices…which only led to the Syrian Civil War, the invasion of Libya, the rise of ISIS, and the signing of the Iran nuclear deal. NBD, in other words. Geopolitical risks in food insecure countries are elevated and getting worse.

Strange bedfellows. In Israel, an opposition coalition led by centrist Yesh Atid and right-wing, religious-nationalist Yamina reached a last-minute coalition agreement to unseat Prime Minister Benjamin Netanyahu from power. The deal is still pending a vote to approve the new government, but it is certainly the most serious threat to Netanyahu’s grip over the premiership in 12 years.

What it means: This coalition is remarkable, even by Israeli political standards. It combines parties from across the Israeli political spectrum and also marks the first time an Arab party has ever been part of a coalition deal. Netanyahu still has cards to play, however: if he can secure just one defection from the coalition, he can block it from taking power, and there are already signs that some in Yamina are not on board. Even if this government does take power, it is hard to imagine it lasts very long. 

Still, some important precedents have been broken. The most important thing to note is the taboo over an Arab party’s inclusion in a coalition is now a thing of the past. If this sets a precedent, it could fundamentally change Israeli politics for a generation or more. It is also worth noting that if Yamina’s Naftali Bennett does indeed become Prime Minister, he will become the first observant/religious Jewish Prime Minister of Israel in its modern history. One can’t help but wonder how the mostly secular Zionists that founded Israel would feel about that. 

Making up is hard to do. Chinese Vice Premier Liu He held virtual talks with U.S. Treasury Secretary Janet Yellen. 

What it means: This is a bigger deal than it seems. After the 2008 financial crisis, U.S. and Chinese officials regularly coordinated policy decisions in an effort to limit the fall-out of the economic crisis. One of the reasons COVID-19 became a global pandemic was because such coordination was (and has remained) completely absent between Washington and Beijing. If this is a sign that both sides are able to coordinate even whilst being competitive, it is a hugely constructive and stabilizing sign for the bilateral relationship.

Honorable mention

Due to roadblocks and limited storage capacity at Colombia’s primary Pacific-facing port at Buenaventura, Colombian importers and exporters are trying to shift operations to the Caribbean ports of Barranquilla and Cartagena.

The Turkish lira hit a new record low on Wednesday after Turkish President Recep Tayyip Erdoğan spoke with Turkey’s new central bank governor and expressed the “need to lower interest rates” by July or August.

The U.S. Trade Representative Katherine Tai announced that the U.S. was imposing and temporarily suspending tariffs on $2 billion worth of goods from Austria, India, Italy, Spain, Turkey, and the UK.

Japanese Prime Minister Yoshihide Suga reportedly plans to call a snap election after the Tokyo Olympic Games.

Indian Prime Minister Narendra Modi thanked U.S. Vice President Kamala Harris for assuring that the U.S. would begin providing India with COVID-19 vaccine supplies by the end of the month.

Hungarian Defense Minister Tibor Benkő expressed his support for two bills that would “lay the foundations for a comprehensive approach” for Hungary’s security challenges.

Chinese State Councilor and Foreign Minister Wang Yi held meetings with foreign ministers from Poland, Serbia, Ireland, and Hungary this week.

The IMF agreed to bailout packages totaling $2.5 billion for Uganda and the Democratic Republic of Congo to help both countries mitigate the economic impact of the COVID-19 pandemic

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