The Weekly Rundown: Rising U.S.-Iran Tensions, Hong Kong Protests and Russian Influence in Africa

8 MINS READJun 15, 2019 | 20:18 GMT
The Norwegian-owned Front Altair oil tanker burns after being attacked in the Gulf of Oman on June 13, 2019.
(AFP/Getty Images)

The Norwegian-owned Front Altair was one of two oil tankers attacked in the Gulf of Oman near the strategic Strait of Hormuz on June 13. The United States has blamed Iran for the attacks, an accusation Iran denies.

Stratfor's geopolitical guidance provides insight on what we're watching out for in the week ahead.

On the Record

I don't consider Trump as a person deserving to exchange messages with. I have no response for him and will not answer him.

                                           Ayatollah Ali Khamenei, Iran's supreme leader

On Our Radar

Oil Tankers Targeted Near the Strait of Hormuz. With significant evidence pointing to Iran's involvement in attacks this week on two oil tankers in the Gulf of Oman, we are now watching for additional such incidents in the weeks and months ahead. Iran is likely to continue these attacks as long as the United States maintains its maximum pressure campaign against it, hoping that by raising the stakes Washington will back down out of concern for the wider economic damage and drain on resources that a conflict with Iran would entail. Instead, the United States is likely to reinforce its assets in the region and seek to set up a naval escort force for shipping there. With both Iran and the United States unlikely to back down, the possibility of an accidental or intentional clash between U.S. and Iranian forces in the region now looks much greater.

Protesters Flood the Streets of Hong Kong. Backing down after days of mass protests, Hong Kong Chief Executive Carrie Lam announced on June 15 that she was hitting pause on a controversial extradition bill to allow more time for deliberation. Whether Lam's decision has any moderating effect on protests still planned for June 16 and a citywide strike scheduled for June 17 remains to be seen. Protesters want the government to withdraw the bill, not delay it, and many have called for Lam to resign. The Chinese central government in Beijing expressed support for Lam's decision, which was also welcomed by the United States. With the extradition bill still legally alive, we will keep watching to see how Beijing works to influence the Hong Kong government's decision and, critically, how the United States chooses to respond and whether Washington spins the issue into its broader trade talks with China. There has been speculation over the past week that the White House, facing growing pressure from Congress, could reexamine Hong Kong's special trade and economic status under the 1992 U.S-Hong Kong Policy Act.

India Fires Back on U.S. Trade. India could be emerging as a new front in U.S. President Donald Trump's trade wars. Sources are telling the Indian press that the finance ministry plans to announce its long-delayed $235 million in tariffs against 29 American goods by June 16. If true, the move would mark a response to the Trump administration's recent decision to revoke India's preferential trade status under the Generalized System of Preferences (GSP) program. India — a beneficiary of the GSP since 1975 — had first floated its tariff threat last summer after failing to receive waivers from the United States on steel and aluminum shipments. But it dithered, hoping to seal a mutually beneficial trade package that would preserve its benefits under the GSP, which is designed to boost U.S. trade with developing economies. Now, all eyes will fall on U.S. Secretary of State Mike Pompeo's visit to New Delhi later this month. Doubtless, India's rejoinder is aimed at providing leverage during talks with Pompeo. But India's limited retaliatory options — coupled with the importance of the United States as an export destination — mean New Delhi will aim for a resolution rather than a war.

Ethiopia's Telecom Sector Open for Business. Ethiopia is pushing to liberalize its much-coveted telecommunications sector, with reports suggesting the Horn of African giant is preparing to issue telecom licenses by the end of the year. Currently, Ethiopia's telecom sector is a huge and untapped market, long blocked from foreign and internal competition. However, with state-owned Ethio Telecom valued between $15 billion and $20 billion, future partial privatization of the company could inject significant foreign currency and investment into Ethiopia's economy, which has long suffered from crippling foreign exchange shortages. Indeed, the decision to open up the sector marks an important turning point for Ethiopia, as its leaders look to stimulate private sector growth after years of heavy-handed government-led investment.

Mexico Moves on Immigration Measures. This week began in the wake of President Trump suspending the tariff threat he had leveled against Mexico just eight days earlier. With Trump touting "large-scale" actions by Mexico to curb Central American migration, this week cast further doubt on Mexico's ability to deliver in a manner that will mollify the White House, which will hold on to the option of imposing tariffs on Mexico. Mexico's military high command reportedly believes that the country's National Guard is not up to the task of stemming the flow of migrants and that President Andres Manuel Lopez Obrador's austerity measures will further hamper efforts. The announcement that Mexico will accept 50,000 asylum seekers in the coming months will mean massive backups in processing. Mexico also has denied that it agreed to import more U.S. agricultural goods — an aspect of the long-term deal hailed by Trump that could become a sticking point. And with Central Americans still driven to migrate north by endemic factors — and mounting unrest in Honduras — Mexico will find itself caught in the middle.

The Race to Replace May Begins. Of the 10 candidates to become the next leader of the United Kingdom's Conservative Party (and therefore, the next British prime minister), only six remain after the first round of voting this week. By the end of new rounds of voting next week, we will know the final two candidates, and former Foreign Secretary Boris Johnson, a hard-line Brexiteer, probably will be one of them. Johnson has promised to take the United Kingdom out of the European Union by Oct. 31 with or without a deal. While his appointment as prime minister would increase the chances of a disorderly Brexit, we think that even a hard-liner would first seek to reach an agreement with the European Union before making any unilateral moves. Moreover, the British Parliament will still have the chance of triggering a no-confidence motion against a rebel prime minister.

On Our Minds

Russia's Strategy in Africa Gets Less Murky. The Guardian newspaper recently reported that it had seen a trove of documents showing a concerted Russian influence campaign across Africa. While the documents have not yet been published, the news fits with the notable increase in Moscow's efforts across Africa in recent years. From sending weapons and security advisers to the Central African Republic to placing undercover political operatives in Madagascar ahead of its recent presidential election, signs clearly point to a growing Russian desire to reassert itself in Africa. Consequently, as Russia's moves evolve and gain pace, it remains to be seen whether other outside powers such as France, a still influential former colonial power, seek to counter Moscow's efforts. While the days of the Cold War are long gone, Russia's willingness to expand its influence to highlight its great power status remains.

A Bellwether for the U.S.-Turkey Relationship. The United States has given Turkey until July 31 to either dump its deal with Russia to acquire the S-400 missile system or else begin to lose access to the F-35 stealth fighter development program. Turkey has consistently said it won't abandon the S-400 deal, as Ankara looks to build up a diverse range of weapons supplies, leaving the two NATO allies at an impasse. Should Turkey take the S-400, it risks not just losing the F-35 but also sanctions under the U.S. Countering American Adversaries Through Sanctions Act — sanctions that could seriously harm the already unsteady Turkish economy. But more than that, the dispute threatens to widen mistrust between Turkey and the United States — potentially to Russia's benefit.

To Meet or Not to Meet. There still is no definitive confirmation of a meeting between Chinese President Xi Jinping and U.S. President Donald Trump at the June 28-29 G-20 summit in Osaka, Japan. Trump has entertained the idea of immediately imposing additional tariffs on China if Xi doesn't show up, and by creating a "national technological security management list," China hasn't shown an intent to back down. With time running short and any hope for a trade deal dwindling rapidly, we are watching for signs of any lower-level contacts in the coming days and for how both sides shape up their narratives leading up to the G-20.

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On Our Calendar

In the coming week, Guatemala holds presidential and congressional elections, G-20 energy ministers are meeting in Japan and the British Conservative Party holds additional votes to choose former Prime Minister Theresa May's successor. For more, see our Geopolitical Calendar.

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