Hydrogen is Inevitable, Tukey Doubles Down, Trouble in Paradise, The Arab Spring that Never Ends, and The Week In Review

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Hydrogen is Inevitable, Tukey Doubles Down, Trouble in Paradise, The Arab Spring that Never Ends, and The Week In Review

Hello readers! We hope you are all happy, healthy, and well. We’ll be off next week. In the meantime, if you need an extra dose of Perch in your life, you can check out an article Jacob wrote for Lykeion on what geopolitics is and why it matters. Cheers and catch you on the flip side!

Hydrogen is inevitable. The EU released a set of legislative proposals to decarbonize the EU gas market, which includes shifting from natural gas to biomethane and hydrogen and prohibiting long-term natural gas contracts beyond 2049.

What it means: This was auspicious timing, as hydrogen is the subject of our latest podcast with our future futurist, Garry Golden. (Click here to listen or read the transcript.) The long-term contracts issue is also not just about decarbonization: it’s also about eliminating European dependence on Russian imports.

Turkey doubles down. ​​Turkey’s Central Bank (CBRT) cut interest rates by 1 percent, to 14 percent from 15 percent. The Turkish lira plunged below 15 to the dollar, a new record low. The CPI for November climbed 3.51 percent month-on-month, bringing year-to-year inflation in Turkey up to 21.31 percent. President Recep Tayyip Erdoğan (RTE) announced that Turkey’s minimum wage will be increased by 50 percent.

What it means: The CBRT justified the move by explaining that it views inflation as transitory and that Turkey will support a current account surplus in 2022 due to increased Turkish exports. Turkey is basically the only country in the world loosening monetary policy right now (China sort of is, but that’s after tightening this year), and RTE is betting that he can supercharge growth going into elections without experiencing political consequences or, in a worst-case scenario, hyperinflation. 

Trouble in paradise. Canada and Mexico do not like a provision in the Biden administration Build Back Better Act, which is currently making its way through Congress. At issue is an electric vehicle tax credit, which offers a $7,500 refundable tax credit for purchasing an EV. (Americans can claim additional credits of up to $5,000 more if they buy a car built and assembled in the U.S., and even the base credit expires for all but American-made cars after five years.) Mexican Secretary of the Economy Tatiana Clouthie threatened to raise the dispute within the USMCA’s conflict resolution process and at the WTO – while “evaluating all kinds of retaliation.” Canada went a step further and explicitly threatened tariffs and even suspended concessions made in the USMCA.

What it means: That’s the problem with protectionism – what goes around comes around. For more, head on over to LatamPolitik

The Arab Spring That Never Ends. Tunisian President Kais Saied announced the country will hold a referendum to amend its constitution in July, followed by parliamentary elections in December. Tunisia’s parliament speaker Rached Ghannouchi, also the leader of the Islamist Ennahda Party, rejected Saied’s proposal and said parliament should not remain suspended for another year.

What it means: Saied’s proposals would serve to increase the power of the Tunisian president significantly. If Ghannouchi can attract support from Tunisia’s labor unions or the security forces this could get ugly. In the meantime, it looks like a volatile next 6 months for Tunisia politically, and that the last, best hope of the Arab Spring producing positive political change is fading.

Extra! Extra!

Poland discovered hundreds of well-preserved dinosaur footprints. 

China held its annual Central Economic Work Conference, an important meeting for setting fiscal and monetary policy priorities for the year ahead. [If you’re interested in the investment implications of this, reach out to us directly.]

Japanese start-ups raised ¥342.5 billion (~$3 billion) in the first six months of 2021 – triple the amount in the same period five years ago, and the most since the second half of 2019.

The Indian government is working on a plan to overhaul the country’s telecommunications sector.

The Netherlands will form a new four-party coalition led by current Prime Minister Mark Rutte. 

Russian President Vladimir Putin and Chinese President Xi Jinping held a 90-minute phone call and extolled their “new model of cooperation.”

The Ecuadorian government declared force majeure on all Ecuadorian oil contracts due to the impact of river erosion on three major pipelines in the country.

The United Arab Emirates threatened to withdraw on a $23 billion arms deal with the U.S. to buy the F-35 fighter jet. Israel Prime Minister Naftali Bennett traveled to the UAE to meet with Crown Prince Mohammed bin Zayed.

South Africa’s High Court ruled that President Jacob Zuma should go back to prison. If you missed our podcast on South Africa earlier this year on this issue, check it out!