Global: EU announces 35-billion-euro loan for Ukraine financed by Russian assets frozen globally
In Kyiv on a visit, European Commission President von der Leyen announced a loan of up to 35 billion euros ($39 billion) for Ukraine for defense against Russian attacks and protecting energy infrastructure.
Our Take: The funding will be financed through the accumulated interest on the $300 billion in frozen Russian assets, a novel financing mechanism that has been under negation among G7 members for months. Russia has threatened to retaliate against any country that seeks to benefit from frozen Russian assets.
Read More: Reuters, Wilson Center, Chatham House
Europe: Deadly floods strain government finances in central Europe
Deadly floods last week have cost an estimated $10 billion in damage in Czech Republic and Poland.
Our Take: The dramatic flooding in central Europe, the worst in the last 20 years, has caused widespread damage to infrastructure, manufacturing, agriculture and residences. While the EU is pledging aid from the EU's solidarity fund, the monies are not expected to cover all flood losses and governments might be forced to amend their budgets to cover the emergency needs. The region is still recovering from the COVID economic downturn, but the outlook has been positive for the second half of 2024, with inflation easing, interest rates coming down, but with deficits still exceeding 3% of GDP (the EU target rate), with the flooding presenting new headwinds to economic recovery.
Read More: Reuters, European Commission
Middle East: US officials say no peace deal coming
US officials told the Wall Street Journal that the US has essentially conceded that a ceasefire deal between Israel and Hamas is "out of reach," throwing cold water on the possibility of a negotiated end to the war.
Our Take: The admission comes after almost a year of failed negotiations, during which the two parties have failed to close stubborn gaps, and the war has grown in scope and intensity. In the absence of a peace deal, the question becomes how the US envisions an end to the war, and what role Washington will play. Israel may be allowed to achieve its goal of a total elimination of Hamas, a military occupation of Gaza in the aftermath. The US may hope that Israel will opt to wind down the war on its own, as popular support for the conflict, and for Netanyahu, wanes. In the meantime, the US and other interlocutors will likely continue to push for talks, with the hope that conditions on the ground may change the parties' calculus.
Read More: The Wall Street Journal [paywall]. The Carnegie Endowment, The Wilson Center
Americas: "Race against time" in Haiti
The UN called for a multinational security mission in Haiti to be extended beyond its expiration at the end of the month, citing the expansion of out of control gang violence.
Our Take: The UN expert of human rights in Haiti called the situation in the country, where gangs have taken hold of large swaths of the country over the last few years, a "race against time." With less than two weeks left on the mission's initial one-year mandate, less than a quarter of promised troops have deployed and results remain scarce. International bandwidth has been limited for Haiti, which has been beset by gang violence – spurring a renewed migrant crisis into Latin America and the US – since 2021.
Read More: Reuters, International Institute of Strategic Studies, The Economist [paywall]
Asia-Pacific: China to sign security deal with Pakistan after deadly militant attacks
Following a deadly string of militant attacks on Chinese infrastructure projects and workers in Pakistan, Beijing and Islamabad are close to signing a security deal for their protection.
Our Take: The impending China-Pakistan security deal represents a strategic pivot in China's approach to protecting its overseas investments, particularly those under the China-Pakistan Economic Corridor (CPEC). By deploying Chinese security personnel alongside Pakistani forces, Beijing is proactively addressing Pakistan's inability to safeguard its workers from rising militant attacks. While this move could unlock further Chinese investments, including the revival of the $7 billion Main Line 1 railway, it risks sparking local backlash due to foreign security presence.
Read More: Firstpost, Nikkei Asia [paywall], Lowy Institute
Trade & Compliance: Ammunition from India goes to Ukraine while New Delhi downplays
A Reuters report on Thursday claimed that artillery shells sold by Indian arms manufacturers had been diverted by European customers to enter Ukraine, which India's foreign ministry described as "speculative" and "misleading".
Our Take: The reported diversion of Indian-made munitions to Ukraine places New Delhi in a delicate position, balancing its traditional ties with Moscow and increasing defense collaboration with the West. While India refutes the claims, its efforts to expand arms exports make it vulnerable to unauthorized transfers. This incident risks straining India-Russia relations, especially as Moscow grows sensitive to any perceived support for Ukraine and has repeatedly raised the issue with New Delhi. However, the small scale of the arms involved may offer India some diplomatic flexibility, enabling it to reassure both sides without drastic policy shifts.
Read More: BBC, Reuters, The National Interest
Disruptive Technology: Apple's iPhone 16 hits stores without anticipated AI features
Apple released its iPhone 16 on Friday but has yet to make its highly anticipated generative AI-driven Apple Intelligence features available to users.
Our Take: Apple Intelligence features, including an enhanced version of Siri and photo editing tools, will be available in October. Apple's decision to stagger the rollout of these capabilities suggests a focus on delivering a refined user experience, particularly as AI technology continues to rapidly develop. As these features are introduced, analysts expect them to enhance the overall functionality of the device and strengthen Apple's position in the AI-driven smartphone market.
Read More: CNBC, TechCrunch
Energy Transition: US government awards $3 billion to battery supply chain manufacturers
The US Department of Energy announced plans to award $3 billion to 25 battery manufacturing sector projects in 14 states, seeking to jumpstart the domestic supply chain.
Our Take: This is the second round of EV battery funding under the Bipartisan Infrastructure Law. The US government is investing in the battery supply chain to create domestic alternatives, for economic security and to speed up energy transition. According to market reports, over 75% of the world's lithium-ion batteries are produced in China, with China dominating much of the supply chain from mining to mineral processing. The sourcing of batteries has become a political issue jeopardizing the availability of the clean vehicle credit designed to create a financial incentive for consumers to make the jump away from combustion engines.
Read More: Reuters, Reuters, TrendForce
ESG: House repeals tailpipe emissions target
The House of Representatives voted narrowly to repeal an EPA regulation that would cut tailpipe emissions by 50% from 2026 levels by 2032. Opponents argued that the regulation is so stringent that it would effectively push gas-powered vehicles out of the US market.
Our Take: The tailpipe emissions regulation is part of a major raft of new regulations set out of the EPA this spring, a foundational element of Biden's larger climate policy goals. The tailpipe measure is the latest to face court challenges and pushback in Congress, demonstrating the limit of regulator changes as policymaking tools – and the divisive landscape of environmental policy. In this case, Biden has pledged to veto the repeal if it passes the Senate.
Read More: Reuters, CNN, E&E News
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