July 24, 2020

The U.S. and UK have accused Russia of test-firing a “projectile with the characteristics of a weapon” from one of its satellites, raising concerns that the Kremlin may be positioning itself to gain leverage over other countries’ assets in space. According to a U.S. Space Command statement, evidence points to the projectile being an “anti-satellite weapon”. Satellites are critical to a number of essential daily activities, including weather forecasting, inter-continental telephone calls, ship and aircraft navigation, and military monitoring and evidence-gathering. International attention has been focused on Russia’s terrestrial aggression of late, specifically its long-standing (and likely escalating) efforts to interfere in western countries’ elections. A UK Intelligence and Security Committee report released this week found that the country and its intelligence apparatus failed to respond to credible evidence that the Kremlin engaged in a sweeping influence campaign to manipulate the UK’s Brexit referendum in 2016. Western countries have lately determined that Kremlin-sponsored hackers have made attempts to steal Covid-19 vaccine research, and experts are also increasingly alarmed by Russia’s interference in internal conflicts in countries including Syria, Libya, and Afghanistan. These latest accusations round out an emerging picture of a country that is seeking to reestablish its Soviet-era sphere of influence and regain its former status as a political, scientific, and military heavyweight.

Beijing has closed the U.S. consulate in Chengdu as retaliation for the U.S.’s forced closure of the Chinese consulate in Houston with just 72 hours’ notice this week. Though Beijing has called for restraint, the tit-for-tat closures mark a notable escalation in an already fraught bilateral relationship. The U.S. State Department cited “massive illegal spying and influence operations” as justification for the move and identified the Houston consulate as an epicenter for Chinese theft of U.S. research. In a speech yesterday, Secretary of State Mike Pompeo accused China of seeking global hegemony based on a “bankrupt, totalitarian ideology” and said the last 50 years of U.S. engagement with the country have benefited Beijing at U.S. expense. U.S. policy toward China has pivoted in recent weeks from efforts to stay on solid diplomatic and trade footing while simultaneously pushing back on Chinese curtailment of human rights at home and abroad, along with large-scale operations to infiltrate U.S. institutions – government and private sector – and acquire valuable information in various fields, from aerospace to agriculture. The change in tone from the U.S., along with growing U.S. success in strengthening a coalition of like-minded allies alarmed by China’s increasing aggression (e.g. in Hong Kong, India, and the South China Sea), is lending credence to voices within China claiming that the U.S.’s only goal is contain the country and prevent its rise. Though we expect the U.S. and China will seek to preserve components of the relationship, including the phase 1 trade deal, the relationship is now at possibly its lowest point since the two countries established diplomatic ties in 1979. As hawkish voices come to the fore on both sides, the risk of a misstep rises.

Mexican President Andrés Manuel López Obrador (AMLO) is looking to score political points at home for extraditing former Pemex CEO Emilio Lozoya to face corruption charges. Lozoya, who was flown back to Mexico from Spain last week, served as the chief officer to the state-owned oil giant Pemex under former Mexican President Enrique Peña Nieto. He is charged with having orchestrated a bribery scheme to pass energy reforms through congress in 2013. The energy reforms were considered a hallmark of the Peña Nieto administration and were applauded by the business community, as they opened up Pemex and the energy sector to private investment. AMLO has said that those reforms to Pemex came at the public’s expense. Lozoya is also charged with the illegal transfer of funds from Odebrecht, the Brazilian construction company embroiled in corruption charges throughout Latin America. Pemex faces difficulties now due to a fall in oil prices, plummeting demand since the onset of the coronavirus and accompanying global shutdowns, and recent credit downgrades. Even before Covid-19, Pemex was troubled, having lost $36 billion in 2019. However, AMLO has consistently tied the troubles of Pemex to the corruption of past administrations, so the extradition of Lozoya fits into his anti-corruption campaign and is a political win for him with his base. It comes at a time when his popularity has fallen to around 50% due to his response to the coronavirus and the economic fallout. Mexico’s GDP is forecast to contract by as much as 10% in 2020, and so far, AMLO has not enacted fiscal stimulus measures to protect the economy.