Guidance

The Weekly Rundown: Inter-Korea and China-India Tensions, and Serbia-Kosovo Mediation

5 MINS READJun 20, 2020 | 15:00 GMT
South Korean soldiers gather near a guard post in the border city of Paju, South Korea, on June 17, 2020.

(JUNG YEON-JE/AFP via Getty Images)

Highlights

A look at what the coming week will bring -- and a list of recommended Stratfor articles from the week that was....

What We're Tracking

A trilateral India-China-Russia foreign ministerial meeting. The June 23 meeting comes in the wake of deadly clashes between Chinese and Indian troops along their shared Himalayan border. The incident in Ladakh that left at least 20 Indian soldiers and unconfirmed numbers of Chinese personnel dead was the worst in six decades, and risks triggering broader tensions. The past few days, however, have seen signs of deescalation, with China reportedly releasing Indians detained in the fighting and India agreeing to attend the trilateral summit. While China can control its domestic political scene to maintain a measured course, much will depend on whether India can do the same — and whether, as the weaker party, it can manage to convince China to ease back on some of its incremental gains along the border. The factors driving broader tensions remain in place, raising the possibility of more flare-ups.

North Korean defectors leafleting the DMZ. The June 25 launch of balloons from South Korea bearing propaganda might seem routine, but this launch carries massive significance because it comes as North Korea has focused extreme ire on South Korea for tolerating such measures, moving to cut off communications, demolish an inter-Korean liaison office and threaten to reverse its side of a 2018 military deescalation agreement. South Korean authorities have pressured these groups to halt their activities, but if the launch proceeds, it risks a shootdown by the North Korean military that could result in ordnance landing inside South Korea. While the resulting escalation would be unlikely to get out of hand, it still would worsen inter-Korean relations. 

The United States steps into Balkan mediation. Representatives from Serbia and Kosovo will meet at the White House on June 27 in a high-profile attempt by the United States to mediate between the two Balkan rivals. For years, the European Union has tried to improve ties between Serbia and its former province, but little progress has been made. Belgrade has denied rumors that it is about to recognize Kosovar independence, but the fact that it has accepted mediation from the United States (a country that participated in the NATO bombing of Serbia in 1999 and supported Kosovo's 2008 declaration of independence) is in itself notable. 

South Africa reveals its updated medium-term budget outlook. South African Finance Minister Tito Mboweni on June 24 will reveal much-anticipated new projected spending and debt levels over the next few years that take into account the impact of COVID-19. Just before the outbreak of the pandemic, Mboweni announced in February that the country needed a significant austerity push to make its debt sustainable and that even with austerity, its debt-to-GDP ratio would reach 71 percent by 2023. Its deep recession, which could see its GDP decline by 5 to 10 percent this year, plus stimulus plans have blown its previous strategy to pieces. Its new assessment is likely to push its 2023 target to between 80 and 90 percent. While that target will be important to watch, it will be important to see whether the South African government plans a sharp tapering off of spending to consolidate its finances and balance its budget in the next few years, or accept a grim reality of its debt-to-GDP ratio rising above 90 percent in the medium term.

A downward correction expected from new IMF estimates. The International Monetary Fund revises its 2020-2021 global economic forecast on June 24. Public statements by senior IMF officials indicate a substantial downward correction to its April projections that the global economy would contract by 3 percent in 2020 and grow by 5.8 percent in 2021. More recently, the World Bank in early June predicted a 5.2 percent global economic contraction this year and the Organization for Economic Cooperation and Development foresaw a 6 percent decline. Point projections to tenths of decimal points are probably pointless since economic models have proven incapable of dealing with uncertainties and discontinuities of an unprecedented global lockdown. Projecting a range of possible outcomes under different scenarios seems more appropriate in current circumstances.

Russian and U.S. delegations meet June 22 in Vienna to initiate talks on a potential New START extension. The United States has long held off on negotiations over the nuclear arms control treaty, but recent leaks from the administration of U.S. President Donald Trump and the move toward talks suggest that Washington may be considering extending the treaty before it expires in February 2021. Such an extension might only be for a shorter period of time than the five-year extension option the treaty itself provides, but the United States has been reluctant to sign off on this without China's unlikely inclusion in the treaty.

Recommended Reading

With U.S.-Russia Talks Ahead, New START's Future Hangs in the Balance

The United States is seeking to buy time in upcoming arms control discussions with Russia, and could agree to a brief extension of New START in an effort to draw China into a longer-term discussion about its potential inclusion in the treaty. 

North Korea and South Korea Inch Closer Toward Low-Level Military Confrontation

A mounting inter-Korean spat over propaganda balloons, amid domestic political developments deemed provocative in both countries, is raising the risk for low-level military confrontation while threatening South Korea's efforts to begin its COVID-19 economic recovery. 

Clashes on the China-India Border Presage Intensifying Competition

A deadly escalation between Indian and Chinese troops in the long-disputed territory of Ladakh could presage tactical and strategic escalation with major potential diplomatic, economic and political consequences for the two giants. 

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