Link back to the discussion thread.
Europe’s close to hitting its natural gas storage goals for the winter — 2 months early, despite Russia’s squeeze Business Insider
European gas shortages likely to last several winters, says Shell chief Guardian
Gas shortages across Europe are likely to last for several winters to come, the chief executive of Shell has said, raising the prospect of continued energy rationing as governments across the continent push to develop alternative supplies.
Cuts to the supply of Russian gas since the invasion of Ukraine have plunged European countries into a devastating energy crisis, driving up wholesale prices to leave consumers facing huge bills and the highest rates of inflation since the 1980s.
Speaking at a press conference in Norway on Monday, Ben van Beurden said the situation could persist for several years. “It may well be that we will have a number of winters where we have to somehow find solutions,” he said.
- Western Europe headed for ‘energy collapse’ – Hungary RT
Western Europe’s policy of rejecting Russian energy, even in the absence of suitable alternatives, could lead to systemic collapse when the public is left without heat this winter, Hungarian Foreign Minister Peter Szijjarto warned on Monday.
“All these statements … from Western Europe on the issue of energy supply simply do not work at all with winterr approaching,” Szijjarto explained to a meeting of his country’s diplomats, according to the Sputnik news agency.
The Foreign Minister pointed out that while “ideological, political, communication statements with effective support from the international media can easily inflate balloons that cover people’s eyes,” all the ideology in the world won’t keep EU citizens warm when winter approaches.
“It is very difficult to explain to someone in winter that they are not cold when there is no heating.”
- Euro zone economic sentiment fell more than expected in August Inquirer
Euro zone economic sentiment fell more than expected in August, data showed on Tuesday, dragged lower by a drop in optimism in industry and in services despite a better mood among consumers, in retail and in construction.
The European Commission’s monthly economic sentiment index fell to 97.6 points in August from a downwardly revised 98.9 in July, more than the decline to 98.0 forecast by economists polled by Reuters.
The fall was the most pronounced in industry with the index down to 1.2 points from 3.4 points in July and in services, where it fell to 8.7 from 10.4 in July.
Meanwhile the index for consumers improved to -24.9 from -27.0 in July and to -6.3 from -7.1 in retail trade.
Inflation expectations in the manufacturing sector also declined to 43.7 from 45.3 in July, continuing a steady downward trend since peaking at 59.3 in April.
- Germany Seeks to Ban National Vetoes in EU TeleSUR
German Chancellor called on Monday on the European Union to eradicate the right to veto.
Olaf Scholz, the German Chancellor, called on members of the European Union to drop the right to veto in favor of majority voting in several key areas, explaining that this would contribute to the bloc’s future expansion.
The German official emphasized that changing the voting practices might facilitate the bloc’s growth, describing how the current schemas could annulate the accession of a candidate country. Scholz proposed the introduction of majority voting on several pressing matters such as sanctions and human rights.
“Where unanimity is required today, the risk of an individual country using its veto and preventing all the others from forging ahead increases with each additional member state,” said the top German official.
He continued to say that “the principle of unanimity only works for as long as the pressure to act is low,” referring to Russia’s special military operation in Ukraine as an example, saying that this has challenged the way the EU applies some policies.
Scholz also suggested the EU submit taxation and foreign policy to majority voting, despite acknowledging “full well that this would also have repercussions for Germany.”
- Russia says economy to contract by less than 3% in 2022 Reuters
Russia’s economy will shrink by less than 3% in 2022, a much shallower contraction than initially expected, while inflation will be below earlier projections, First Deputy Prime Minister Andrei Belousov said on Monday.
Logitech to wind down remaining operations in Russia Reuters
IEA: Russian Oil Output Still Exceeding Expectations Oil Price
Six months into Russia’s war on Ukraine, Russia’s oil output has continued to exceed expectations although experts are warning that Moscow will find it increasingly difficult to uphold production as Western sanctions begin to bite.
Western sanctions have been “about to bite” for the last six months. When are the jaws clamping down, exactly? This winter, when everybody wants natural gas from Russia for heating?
According to the latest report by the International Energy Agency (IEA), Russian oil exports fell by 115 kb/d in July to 7.4 mb/d, from about 8 mb/d at the start of the year. That decline is nowhere near the 2-3 million b/d slump predicted by some experts. The country’s crude and oil product flows to the US, UK, EU, Japan and Korea have slumped by nearly 2.2 mb/d since the outbreak of the war, two-thirds of which have been rerouted to other markets. Export revenues fell from 21 bn in June to $19 bn in July, on both reduced volumes and lower oil prices.
- Russia’s Gazprom is cutting gas supply to a top French utility after France’s leader warns of rationing Business Insider
Russia’s Gazprom has told major French utility Engie that it is cutting gas deliveries starting Tuesday, turning up the pressure as Europe scrambles to secure supplies for the winter.
The Kremlin-run energy giant is reducing flows to France over a contractual disagreement, according to Engie.
France, along with other European countries, has been battling a crippling energy crisis as Russia squeezes gas supply to the continent. Moscow is seen as retaliating to Western sanctions imposed over the Ukraine war.
Since war broke out, deliveries from Gazprom to Engie had already fallen substantially, the utility said. France is less dependent on Russian supplies than the likes of Germany, as the imports make up only about 20% of its consumption.
“As previously announced, Engie had already secured the volumes necessary to meet its commitments towards its customers and its own requirements, and put in place several measures to significantly reduce any direct financial and physical impacts that could result from an interruption to gas supplies by Gazprom,” Engie said in a statement Tuesday.
Even so, Gazprom’s move piles the pressure on France over its energy troubles, as it searches for alternative sources of supply before winter drives up demand.
Engie is working on an agreement with Algeria for additional natural gas imports, a deal that could increase deliveries by 50% if it comes to pass, Bloomberg reported. In May, Engie signed an agreement with a Texas LNG provider for gas supplies.
- Germany and Denmark plan to invest $9 billion in an island of wind parks to replace Russian gas Business Insider
Germany and Denmark have agreed on a $9 billion deal to build an offshore wind power project in the Baltic Sea that authorities said would provide enough power for up to 4.5 million households by 2030.
Announced Monday, the deal involves Denmark boosting its planned wind power capacity on Bornholm Energy Island from 2 to 3 gigawatts, per State of Green, an energy and climate arm of the Danish government.
The deal also includes a 292-mile subsea cable that links Bornholm’s wind parks to the German grid in a bid to reduce the region’s reliance on Russian gas and oil.
Currently, Denmark and Germany have offshore wind power capabilities of 1.5 gigawatts and 1 gigawatts in the Baltic Sea, accounting for more than 90% of the region’s wind energy, State of Green wrote in its statement.
Asia and Oceania
- Biden plans to ask Congress to approve $1.1 bln arms sale to Taiwan- Politico Reuters
The Biden administration plans to ask the U.S. Congress to approve an estimated $1.1 billion arms sale to Taiwan, including 60 anti-ship missiles and 100 air-to-air missiles, Politico reported on Monday, citing sources, amid heightened tensions with China.
- Rain eases China’s record heatwave but fresh energy crisis looms Guardian
Rain across central China this week is expected to relieve the country’s worst heatwave on record, but weather agencies are now warning of potential floods, while analysts say the energy crisis exacerbated by the months-long drought is not over.
Almost half of China has been affected by the latest heatwave, the hottest since record-keeping began in 1961. Hundreds of temperature records have been broken, and the heat has exacerbated the effects of low rainfall, drying up rivers and reservoirs across the country.
Light to moderate showers have moved into central and southern China, and were expected to intensify this week, according to China’s meteorological agencies (CMA). It said moderate to heavy falls were expected from southern Gansu down to Yunnan and across the drought-stricken Sichuan basin, bringing a risk of flash floods. In Sichuan on Monday more than 110,000 people in Sichuan had been relocated to safer areas.
- China shuts world’s largest electronics market as Shenzhen imposes more lockdowns CNN
China’s southern city of Shenzhen on Monday shut down the world’s largest electronics market and suspended public transport nearby as authorities enforced neighborhood-wide lockdowns in response to a small number of Covid cases.
Huaqiangbei, a busy shopping area home to thousands of stalls selling computer components, mobile phone parts and microchips, is among three neighborhoods placed under a mandatory four-day lockdown in Futian district, according the district government.
Residents in those neighborhoods are forbidden to leave their homes except for Covid testing, which they are required to undergo daily until Thursday.
All businesses in the affected areas are shut down through Thursday, except for supermarkets, pharmacies and hospitals. Restaurant dining is also suspended, with only takeaways allowed.
- Japan calls Russian military drills ‘totally unacceptable’ Inquirer
The Japanese government on Monday strongly condemned upcoming Russian military drills in the northern territories.
Speaking at a press conference, Chief Cabinet Secretary Hirokazu Matsuno said the drills were “incompatible with our country’s position and totally unacceptable.”
Japan has asked Russia to exclude the northern islands from the area where the exercises will be held.
- Disapproval Rate of Japanese Gov’t Hits Record High: New Poll TeleSUR
The disapproval rate of the Japanese government led by Prime Minister Fumio Kishida jumped to a record-high of 39 percent, and 58 percent objected to Kishida’s plan to build next-generation nuclear power plants in the country, according to the latest opinion poll reported by Japan’s Asahi Shimbun newspaper.
The telephone survey, conducted by Asahi Shimbun from Aug. 27 to 28, received 998 valid responses nationwide. While the disapproval rate surged to 39 percent from 25 percent in the previous survey in July, the approval rate of Kishida’s cabinet dropped significantly to 47 percent from 57 percent, according to the newspaper.
- Ukraine War Gives North Korea Reasons to Draw Closer to Russia WSJ
Russia’s invasion of Ukraine has created an opportunity for North Korea, which has strengthened its ties with Moscow and become one of its most outspoken backers.
Pyongyang wants to dispatch laborers to the Russia-controlled regions of eastern Ukraine—Donetsk and Luhansk—providing the Kim regime with a much-needed source of overseas income. Russian President Vladimir Putin has promised to provide allies with advanced weapons and military equipment, just as North Korea is pursuing new assets like hypersonic missiles. Moscow can also boost its cross-border trade of food and aid and use its seat on the United Nations Security Council to block any tighter sanctions on North Korea.
North Korea was one of just five countries in March to vote against a U.N. resolution demanding that Russia end its invasion of Ukraine, with Pyongyang blaming the “hegemonic policy” of the U.S. and its allies as the root cause. In July, North Korea became one of the first countries to officially recognize Donetsk and Luhansk as independent republics, a move that prompted Kyiv to cut diplomatic ties with Pyongyang.
“For North Korea, supporting Putin opens the door to more significant sanctions evasions and sensitive technology cooperation,” said Patrick Cronin, the Asia-Pacific security chair at the Hudson Institute, a think tank in Washington.
The U.N. banned North Korean laborers from working abroad past a 2019 deadline, cutting off a key source of overseas income for the Kim regime. With roughly 30,000 foreign workers from North Korea, Russia was one of the largest hosts of such people before the clampdown. North Korean workers were appealing because their wages were advertised by Russian companies as being 30% to 50% lower than other migrants in the region, who typically came from Uzbekistan and Kyrgyzstan.
Russia is likely to maintain that Donetsk and Luhansk are independent regions not subject to international sanctions violations as nonmembers of the U.N. North Korea’s ambassador to Russia, in a meeting earlier this month with an envoy from Donetsk, revealed plans to send laborers to the region once the Kim regime’s Covid-19 border restrictions were lifted.
North Korean workers could help restore facilities in Donetsk that were damaged by fighting in the Ukraine conflict, said Alexander Matsegora, Russia’s Ambassador to North Korea, in an interview last month with the Russian newspaper Izvestia.
North Koreans are also interested in purchasing spare parts manufactured in the region and reconstructing their production facilities, Mr. Matsegora said, without being more specific. The potential transactions foreshadow other efforts that could constitute U.N. sanctions violations.
- Pakistan floods: One third of country is underwater after record-breaking monsoon Euro News
Efforts are being stepped up to help tens of millions of Pakistanis affected by monsoon rains that have fallen relentlessly since June, submerging a third of the country and killing more than 1,100 people.
The country’s planning and development minister, Ahsan Iqbal, has said that more than €10 billion will be needed to repair the damage and rebuild infrastructure damaged by the floods.
assive destruction has occurred, “especially in the telecommunications, roads, agriculture and livelihood sectors”, he said.
The rains, “unprecedented in 30 years”, according to Prime Minister Shehbaz Sharif, have destroyed or severely damaged more than a million homes and devastated large swathes of farmland vital to the country’s economy.
The United Nations, together with the Pakistani government, has launched a €160 million appeal to help fund emergency aid.
- India considering aid for Pakistan RT
Indian Prime Minister Narendra Modi has offered condolences to the victims of deadly floods in Pakistan, which have killed more than 1,000 and devastated much of the country, amid reports that New Delhi could soon offer assistance to its neighbor.
Modi took to Twitter on Monday to comment on the natural disaster, saying he is “Saddened to see the devastation caused by the floods in Pakistan.”
I love the idea that Modi runs his own Twitter account, or gives a shit about the lives of Pakistan’s civilians.
“We extend our heartfelt condolences to the families of the victims, the injured and all those affected by this natural calamity and hope for an early restoration of normalcy,” the PM added.
- China to Further Supply Humanitarian Aid to Pakistan TeleSUR
China will supply Pakistan with additional humanitarian aid, Foreign Ministry spokesperson Zhao Lijian said Monday.
The move to step up humanitarian aid follows Pakistan’s need for disaster relief amid heavy rains hitting the South Asian nation for weeks now.
According to the Chinese spokesman, 25 000 tents will be provided to the country which has been devastated by the floods.
The Red Cross Society of China will provide the Pakistan Red Crescent Society with 300 000 in emergency cash aid, Zhao said.
Within the framework of the China-Pakistan Economic Corridor, China has already supplied 4 000 tents, 50 000 blankets and 50 000 pieces of tarpaulin.
- US must ‘pay the bill’ for Afghanistan – Russia RT
The US should focus on compensating the Afghan people for the 20 years of “pointless occupation” rather than accusing others of not chipping in, Russia’s envoy to the UN, Vassily Nebenzia, has said.
The US sent troops into Afghanistan in 2001 to fight the Taliban, Al-Qaeda, and other Islamist groups as part of its global War on Terror declared after the 9/11 terrorist attacks in America. The Taliban, however, seized Kabul and overran Afghanistan last year during the final stage of the withdrawal of the US and other Western forces.
At a UN Security Council meeting in New York on Monday, US envoy Linda Thomas-Greenfield suggested that Russia was not doing enough to help Afghanistan’s economy.
“Russia argued, as others have in the past, that Afghanistan’s problems are the fault of ‘the West,’ and not the Taliban. Really?” Thomas-Greenfield said.
“Here is my question: What are you doing to help other than rehash the past and criticize others? If you are concerned that Afghan women and children are dying, how are you helping them?”
The US envoy went on to say that Russia contributed “nothing” to the UN Afghanistan Humanitarian Response Plan this year, and called China’s contributions “similarly underwhelming.”
Nebenzia hit back at Thomas-Greenfield, arguing that Washington should bear the burden, given the nearly two decades of US troops in the war-torn country.
“The cynicism of such statements is simply shocking: We are being asked to pull out our wallet to rebuild the country whose economy was virtually destroyed by the 20 years of occupation by the US and NATO,” Nebenzia said.
“Instead of admitting one’s mistakes and trying to fix them, we are now being chastised for not wanting to pay for the bills of others. It’s an unusual proposition.”
“No, dear former Western partners, it is you who must pay for your mistakes,” he added.
In response, Thomas-Greenfield said: “Let me just state that if the Russian Federation believes that there was an economy in Afghanistan to be destroyed, it’s been destroyed by the Taliban.”
Chinese Ambassador Zhang Jun said, “the fiasco of the past 20 years [in Afghanistan] has once again proved that military intervention and power politics are not the right way,” and “the tragedy in Afghanistan should never be allowed to repeat.”
The UN has warned that the current level of foreign aid to Afghanistan is not enough. “You can’t use humanitarian relief to patch up what has been a completely collapsed economy,” Kanni Wignaraja, assistant secretary general and regional director of Asia-Pacific at the United Nations Development Program, said this month.
- Iraqi capital Baghdad wakes up to gunfire after night of violence Al Jazeera
Fighting has continued in the Iraqi capital between supporters of Shia religious leader Muqtada al-Sadr and his Iran-backed opponents, as well as Iraqi security forces, killing at least 30 people.
Residents of Baghdad woke up on Tuesday to the sound of intermittent gunfire and explosions from the fortified Green Zone, an area that houses government buildings and foreign embassies.
The Iraqi military said militia fighters had fired several rockets at the Green Zone.
The streets stood empty after the military announced a curfew on Monday evening after the violence began.
“We have been hearing sounds of gunfire overnight, medium and light weapons have been used, we heard also several explosions inside the Green Zone, the C-RAM air defence system that belongs to the US embassy in the Green Zone was clearly heard early this morning,” said Al Jazeera’s Mahmoud Abdelwahed, reporting from Baghdad.
“The situation is very tense and it seems that all efforts to de-escalate have gone to no avail as of yet. There have been calls for the Grand Marji’a [the Shia religious leadership] in Najaf city to intervene to put an end to this conflict.”
- Violations of Syria’s Sovereignty Must Cease, China Says TeleSUR
On Monday, Zhang Jun, China’s permanent representative to the United Nations, said that violations of Syria’s sovereignty and territorial integrity must be brought to an end.
There is no doubt that the recent U.S. military operations in eastern Syria constitute a violation of Syria’s sovereignty and territorial integrity and have nothing to do with the right to self-defense under Article 51 of the United Nations Charter, said Zhang.
“The unlawful presence of foreign forces and unlawful military operations in Syria must end,” he told a UN Security Council briefing on Syria, adding that respect for national sovereignty and territorial integrity is an important principle enshrined in the UN Charter and the cornerstone of international relations.
“The provisions of the UN Charter should not be mere quotes for lip service. They are not optional or subject to selective application, and they certainly do not lend themselves to misinterpretation or misapplication,” he noted.
- Morocco acts to conserve water All Africa
Climate change and a harsh summer have led to a severe drop in water reserves in Morocco.
Faced with a reduction in rainfall levels, the authorities decided in July to ban the use of drinking water to irrigate green spaces and wash cars amongst other measures.
The decision is aimed at preventing the uncontrolled use of drinking water for any other purpose apart from human consumption.
Since last year, the reserves in the dams have gone down by 80%, according to figures from Morocco’s ministry of equipment.
- U.S. Business Optimism About China Outlook Drops To Record Low Forbes
Optimism among American companies about the future business outlook in China has dropped to a record low, according to an annual membership survey from the U.S.-China Business Council, or USCBC, released today.
China’s Covid-19 containment strategy now poses the top challenge to businesses, said the council, which presents more than 270 American companies doing business in China including multinationals such GM, Honeywell, McDonald’s, Microsoft, Starbucks and the Carlyle Group.
Ninety-six percent of companies were negatively impacted by China’s Covid-19 control measures and more than 50% say their investment plans were paused, delayed, or canceled as a result, the council said.
- All the economic good news, from jobs to inflation, was just a momentary blip. The worst is yet to come. Business Insider
Over the past month, things have been looking up for the US economy. The latest consumer-price-index inflation report showed signs of cooling. Measures of growth — from the jobs report to retail sales — have been holding up. All this could point to a safe path for the Federal Reserve to ease up on its interest-rate hikes, let the economy normalize, and keep the US from hitting the economic skids.
But this good news doesn’t mean the US economy is out of the woods yet. From inflation to consumer spending, there are clear signs that the economy is still in real danger of being pushed into a recession.
Over the past few weeks, signs that sky-high inflation is cooling off have been the shift that’s garnered the most attention — and raised the most hopes. July saw improvement across several inflation metrics, including a 0% change in month-over-month prices for the consumer price index, largely due to lower energy prices. Despite the seeming breakthrough, it’s premature to ring the all-clear bell.
Even with improvements to those traditional metrics, underlying measures of inflation are still running hot. Take, for instance, the Cleveland Fed’s median CPI, which tries to measure “average” inflation by looking at the price change of the median item in the basket of goods tracked by the CPI. The indicator is of particular interest because, as the Cleveland Fed noted in its research on the new measure, “the median CPI provides a better signal of the underlying inflation trend” than the more closely watched inflation metrics. So while the core CPI, the traditional measure that strips out volatile food and energy costs, rose just 3.8% in July, the Cleveland Fed’s measure rose 6.5% in July and is up 7.6% on average over the past three months. That’s not an acceptable level of inflation for us to declare the problem solved.
Wage growth is another sign that America’s battle with high inflation is far from over. The Atlanta Fed’s median-wage-growth tracker was 6.3% in July and 6.7% on average over the past three months. Wage growth can fuel broader inflation when it grows much faster than business productivity. Given productivity, the Atlanta Fed’s measure needs to be closer to 3.5 to 4%. While Americans' expectations for inflation over the next 12 months have ebbed somewhat, they’re still sitting at 6.2%. “This points to an upside risk for inflation, as workers negotiate higher wages that businesses could pass on to consumers by raising prices,” San Francisco Fed researchers wrote of expectations.
In short, the reasons to expect inflation to remain firm in the quarters ahead are compelling, even if a handful of high-profile goods are getting large price cuts.
Any discussion of the US economy’s strength needs to start with the consumer. American consumers have plenty going for them: a low unemployment rate, built-up savings, and strong household balance sheets. Even as gross domestic product declined in the first half of 2022, consumption held up. Still, the economic outlook is about changes at the margin, and at the margin, consumers' strength is deteriorating. […]
Another warning sign for the economy is flashing from the housing market, where activity has ground to a halt. The rise in mortgage interest rates has taken a bite out of housing demand. Pending home sales and signed contracts on existing properties have collapsed, which implies a significant drop in closings over the next few months.
If consumers and the housing market aren’t likely to kick-start a strong economic uptick, nonresidential business fixed investment — companies spending money to upgrade equipment and software — is unlikely to be much of a driver for growth, either. For one thing, expectations of GDP growth have weakened, and as the outlook for growth weakens, investment by companies tends to slow down (and vice versa). We can already see businesses getting more cautious about their spending. Regional surveys of six-month capital-spending intentions are pointing south. And the tech industry, which accounted for the majority of the growth in real nonresidential business fixed investment over the past two years, has been slammed by a steep stock-market sell-off, reeling because of higher interest rates. It’s also the industry most responsible for the recent increase in layoffs.
And what of the Fed? Is a pivot to slowing interest-rate hikes — or even cutting rates to support the economy — nigh? I think it is unlikely. For starters, Fed officials have been very vocal in recent weeks about their plans to continue hiking rates. At his highly anticipated speech on Friday during the Fed’s annual conference in Jackson Hole, Wyoming, Powell even went so far as to warn of “some pain.” And even slowing down the pace of hikes — not yet a forgone conclusion — is not the same thing as cutting interest rates. Importantly, officials have voiced a reluctance to shift their policy on a dime. Prematurely easing inflation-reduction policy with inflation rates still elevated risks pushing up inflation expectations and entrenching a higher inflation rate into the economy.
Over the past two months, things have started looking up for the economy. But as Americans return from their summer vacations, they’ll be coming back to a real chance of a downturn — or even recession.
To add onto that:
- US home prices are going to stall completely as soaring mortgage rates crush demand, Goldman Sachs warns Business Insider
Goldman Sachs believes the growth in US home prices will shudder to a halt next year, as demand crumbles in the face of higher mortgage costs and unaffordability.
The Wall Street bank’s analysts forecast that house-price growth will slow sharply in the coming quarters, before falling to zero in the third quarter of next year.
“We expect home price growth to stall completely, averaging 0% in 2023,” the team led by chief economist Jan Hatzius said in a note Tuesday.
“While outright declines in national home prices are possible and appear quite likely for some regions, large declines seem unlikely,” they added.
US house prices soared during the coronavirus pandemic as Americans sought more living space during lockdowns and as the Federal Reserve slashed interest rates, which lowered the cost of mortgages.
The S&P Case-Shiller home price index rose more than 40% between February 2020 and May 2022, the latest reading.
Yet Goldman said the sharp increase in the cost of houses, combined with the rise in mortgage rates as a result of the Federal Reserve’s interest-rate hikes, has meant homes are now unaffordable for many buyers.
Existing home sales have already plunged 30% from their peak. They are likely to fall further, which will weigh on prices, Goldman’s analysts said.
- Wealthy Americans are cutting back — and it could push the US closer to a recession Business Insider
Inflation is catching up to the Americans most likely to brush it aside.
The spending environment has shifted immensely over the past few months. Sky-high inflation has wiped out most Americans' pent-up savings, and slowing economic growth has amplified fears of an impending recession. It’s no wonder economic moods remain bleak.
Yet it’s the wealthiest households that are cutting back the most. Americans earning more than $125,000 slashed their discretionary spending in each of May, June, and July, according to credit and debit card data from Bank of America. Discretionary spending counts spending on anything besides groceries, gas, and clothing.
The pullback has emerged in several pockets of the economy. Households earning more than $125,000 have scaled back their spending on airline travel faster than Americans earning less than $50,000. Wealthy Americans' spending on hotels has similarly dipped in recent months.
- More than 40% of Americans think civil war likely within a decade Guardian
More than two-fifths of Americans believe civil war is at least somewhat likely in the next 10 years, according to a new survey – a figure that increases to more than half among self-identified “strong Republicans”.
Amid heated rhetoric from supporters of Donald Trump, the findings, in research by YouGov and the Economist, follow similar results in other polls.
On Sunday night, the South Carolina senator Lindsey Graham predicted “riots in the streets” if Trump is indicted over his retention of classified documents after leaving the White House, materials recovered by the FBI at Trump’s home this month.
Graham earned widespread rebuke. On Monday, Mary McCord, a former acting deputy attorney general, told CNN it was “incredibly irresponsible for an elected official to basically make veiled threats of violence, just if law enforcement and the Department of Justice … does their job”.
Saying “people are angry, they may be violent”, McCord said, showed that “what [Trump] knows and what Lindsey Graham also knows … is that people listen to that and people actually mobilise and do things.
- Over 17 400 Monkeypox Cases Detected in the US TeleSUR
- Petro Calls for Integration of Chile and Venezuela Into CAN TeleSUR
“The requests of Chile and Venezuela must be taken into account,” Colombian President Gustavo Petro said as he called on the Andean Community to reintegrate both nations into the Andean Community.
According to the President, Venezuela and Chile were a fundamental part of the Andean Group, founded in 1969 in Cartagena and later became the Andean Community (CAN), comprising Colombia, Bolivia, Ecuador and Peru as member states.
Speaking at the XXII Meeting of the Andean Presidential Council in Lima, Peru, Petro said: “I believe we must be more powerful, unite more voices. I believe that the requests of Chile and Venezuela should be taken into account” while calling to “return to the first scenario of the Andean community when they were part of this integration instrument.”
The President said that “if Argentina comes closer, the better. The more voices we gather, agree, and integrate, the better; the more powerful the voice will be.”
“How good it would be for the Andean Community to expand under a minimum agreement: respect for the Inter-American Convention on Human Rights,” Petro said.
- Guatemala pledges support for Taiwan, China accuses island of ‘political manipulation’ Reuters
Guatemalan Foreign Minister Mario Bucaro said on Tuesday that the Central American country will “always support” Taiwan, after China conducted its largest-ever military drills around the self-ruled island earlier this month.
Meeting Taiwan President Tsai Ing-wen at the presidential office in Taipei, Bucaro said that Guatemala and Taiwan were “like-minded countries” united by a “democratic alliance”.
“Guatemala will always support Taiwan because we have a firm belief in the principles of peace, sovereignty, and territorial integrity,” said Bucaro.
“Peace is non-negotiable, but especially sovereignty is non-negotiable.”
The Ukraine War
The counteroffensive has finally arrived!
Ukraine wages counterattack to reclaim Russia-occupied Kherson Al Jazeera
Ukraine Launches Southern Offensive, as Inspectors Head to Nuclear Plant NYT
Ukraine Launches Counteroffensive in South, Leading with Artillery Bombardment WSJ
Ukraine’s Southern Counteroffensive, Long Rumored, Might Finally Have Begun Forbes
Ukraine says long-anticipated southern offensive has begun Reuters
Ukraine claims new push in Russian-held region BBC
Ukrainian attempt at counter-offensive has failed – Russia RT
Ukraine’s much-heralded “counter-offensive” in Kherson has “failed miserably,” the Russian Defense Ministry insisted on Monday, listing estimated losses suffered by Kiev during the operation.
Ukrainian forces had attempted to attack in three directions on orders of President Vladimir Zelensky but made no gains, Moscow explained.
Russian troops caused “great losses” to the Ukrainian attackers during the day’s battles, a statement read. Kiev saw 26 tanks, 23 armored fighting vehicles, nine more armored vehicles, and two SU-25 ground-attack jets destroyed, while more than 560 troops were lost, according to the summary.
- The first shipment of Iranian military drones arrives in Russia. NYT
Iran delivered to Russia the first batch of two types of military drones this month as part of a larger order totaling hundreds of the aerial war machines, according to an Iranian adviser to the government and two U.S. administration officials who were not authorized to speak on the record.
American officials said Russia could deploy the Iranian-made drones in its war against Ukraine to conduct air-to-surface attacks, carry out electronic warfare and identify targets.
Iran has officially said that it would not provide either side of the conflict with military equipment but has confirmed that a drone deal with Russia was part of a military agreement that predated the invasion of Ukraine.
UN nuclear inspectors arrive in Kiev RT
Pentagon admits ‘likelihood’ of Ukrainian shelling near nuclear plant RT
A senior US military official admitted on Monday that Ukrainian forces may have struck the area around the Zaporozhye Nuclear Power Plant, but insisted that this was only in response to Russian fire allegedly coming from the area. Earlier in the day, the Russian authorities said a Ukrainian artillery shell damaged the roof of the building storing reactor fuel.
“What I know for sure is that the Russians are firing from around the plant,” the unnamed official told reporters during a background briefing at the Pentagon. “I also know that there are rounds that have impacted near the plant.”
The official said it was “hard to explain, I guess” how the US was monitoring the situation around the nuclear power plant, Europe’s largest.
“And I don’t want to say that the Ukrainians haven’t fired in that vicinity either because I think there’s probably a likelihood that they have, but in good – in a number of cases, it’s returning fire of the Russians who are firing from those locations,” he said.
Climate and Space
- Floods and droughts could cost the global economy $5.6 trillion by 2050, report says Fortune
It’s been a devastating year for the global economy when it comes to natural disasters.
Flooding in Pakistan has forced millions from their homes and killed over 1,000 people. A deadly heat wave in China is having devastating effects on the country’s economy and supply chains. And the ongoing mega-drought on the West Coast of the U.S. is now the worst in 1,200 years, while another in Europe is impacting everything from coal and nuclear power plants to manufacturers’ supply chains.
Now a new study shows the increasing frequency of water-related natural disasters is a trend that will only continue as climate change rages on over the coming decades. The cost to governments, businesses, and consumers will be severe.
Water-related natural disasters, from floods to droughts, could cause a $5.6 trillion hit to global gross domestic product (GDP) between 2022 and 2050, according to a new study from the professional services firm GHD. That’s quite the rise from the norm over the past 50 years.
Between 1970 and 2021, all natural disasters, not just those related to water, caused $3.64 trillion in losses worldwide, data from the World Meteorological Organization (WMO) shows. GHD’s climatologists predict that over the next 30 years, the U.S. alone could lose more than that—$3.7 trillion—due to only water-related natural disasters.
The study follows an April analysis by the Office of Management and Budget that shows the U.S. federal budget could take a $2 trillion hit annually by 2100 due to the impacts of climate change.
The pessimistic outlook from climatologists also comes on the back of one of the worst years in history as far as natural disasters.
In 2021 alone, natural disasters caused $252 billion of economic damage worldwide, a 47% increase from 2020 and 66% above the average over the past two decades, according to the Emergency Events Database, which is maintained by the Centre for Research on the Epidemiology of Disasters.
A total of 432 catastrophic natural events were recorded last year, which is “considerably higher than the average,” researchers at the Emergency Events Database said in March. For example, there were 223 floods that were classified as natural disasters in 2021, up from an average of just 163 annually from 2001 to 2020.
The increase in the number, duration, and impact of natural disasters isn’t a new trend either. Over the past 50 years, climate and weather-related disasters have surged 400%, the WMO said in September.
- Sea Levels Will Rise 10 Inches—No Matter What—By 2100 Because Of Greenland’s Melting Ice, Study Suggests Forbes
Greenland’s rapidly melting ice sheet should push up global sea levels by about 10.8 inches even if the world slashes carbon emissions over the next century, according to a study published Monday, the latest in a string of dire climate predictions this year.
The Greenland ice sheet could lose about 3.3% of its total volume—leading to a large jump in sea levels—if the ice keeps melting at the rate recorded from 2000 to 2019, according to the study, which was published in Nature Climate Change and conducted by researchers at the Geological Survey of Denmark and Greenland.
The study’s authors didn’t estimate how long this process will take, but wrote that most of the expected melting could take place “within this century.”
Researcher Jason Box called the 10.8-inch estimate a “very conservative rock-bottom minimum” that assumes the planet won’t continue to warm: If Greenland’s ice melts at the rate recorded in an especially hot year like 2012, sea levels could rise by 30.8 inches.
Some other recent estimates were far less severe: The Intergovernmental Panel on Climate Change said last year Greenland could contribute between two and five inches to rising sea levels by 2100, depending on how successful humans are at cutting greenhouse gas emissions and slowing climate change.
Monday’s paper used satellite images and observations to estimate where Greenland’s mile-thick ice sheet is melting faster than it can be replenished by snow, distinguishing it from many other sea-level rise studies that rely on mathematical models.
Dipshittery and Cope
I don’t read any of these unless they’re particularly interesting. I’m happy for them tho. Or sorry that happened.
Ukraine says fresh southern offensive is breaking through Russian defenses Inquirer
Ukraine says a new military push is underway and has broken through front-line Russian defenses in the south, possibly signaling the start of its long-awaited counteroffensive Business Insider
Kyiv claims breakthrough in major new Kherson offensive Euro News
Go get ‘em, champ!
- Ukraine has ‘good chance’ to retake territory, U.S. assesses Politico
They have a 70% chance to acquire a 30% chance to eventually possess a 5% chance to retake the Donbass, within the next 3 to 30 months.
- Zelenskiy tells Russian forces to flee as Ukraine counteroffensive begins in Kherson Guardian
Abandon your posts! Flee! Flee for your lives!
- Ukraine is using fake rocket launchers made of wood to get Russia to waste its missiles on useless targets, report says Business Insider
Hopefully Russia starts hitting them with wooden missiles.
- Russian troops in a new combat unit meant to turn the tide in Ukraine keep getting drunk and harassing locals, nearby residents say Business Insider
- A Frontline Shadow Economy: Ukrainian Units Trade Tanks and Artillery NYT
Most of the bartering involves items captured from Russian troops, which are exchanged for urgently needed supplies. “Let’s just call it a simplification of bureaucracy,” one soldier said.
Isn’t it literally the opposite way round? I’ve seen images of Ukrainians selling NATO gear to Russians in exchange for (hilariously) rubles.
- Russia has faced ‘failures’ with Iranian-made drones, says U.S. official Reuters
Man, that was fast. They just got there. Maybe they had trouble finding a crowbar to open the crates?
- Daniel Craig: My mission to end ‘barbaric’ cluster bombs killing Ukrainians Telegraph
I wish him luck! I don’t think you’ll be able to convince Zelensky to stop, though.
- Putin Can Be Pressured to Pull Troops From Ukraine Nuclear Plant Bloomberg
This is the “So, have you stopped beating your wife?” of wartime reporting.
- Ukraine has hobbled Russia’s Black Sea Fleet. Could it turn the tide of the war? Politico
Oh, another one!
- I’m a Ukrainian Soldier, and I’ve Accepted My Death NYT
I’m automatically extremely cynical of the message from any Ukrainian soldier who is willing and able to write articles about their experiences for western audiences and talks in the kind of language below, which is almost indistinguishable from your typical liberal university-educated journalist. If you were hoping for a unique perspective on the war, like I was, you’re going to be very let down. I had to move this from a different section to Dipshittery once I had read it through. Any analysis has already been written by the journalists in the NYT or WSJ or Bloomberg. It doesn’t even go into what I would expect - and even hope - from a soldier in a war, who has been told that he is defending his homeland from turbogenocide or whatever ridiculous nonsense they’re feeding Ukrainians these days - volcanic anger at Russia, diabtribes upon diabtribes, and so on. But no. It remains clinical and unemotional, like he’s a schoolteacher and he’s not angry, but disappointed, at Russia. It’s a shame how many much more interesting lives and viewpoints are being snuffed out, like the many Ukrainian conscripts who aren’t Nazis but forced at gunpoint by them to be on the front, and what they’re feeling about their situation. How they fear Russia but also Azov and Right Sector and Kraken. What it’s really like to be on the Donbass front, instead of the much safer place that this author is stationed. But those articles won’t, and can’t, be written. At least, not for western audiences. At least, not yet.
Recently, one of the companies in our battalion returned from a mission in eastern Ukraine. When we saw our comrades a month earlier, they were smiling and cheerful. Now they don’t even talk to each other, never take off their bulletproof vests and don’t smile at all. Their eyes are empty and dark like dry wells. These fighters lost a third of their personnel, and one of them said that he would rather be dead because now he is afraid to live.
I used to think I had seen enough deaths in my life. I served on the front line in the Donbas for almost a year in 2015-16, and I witnessed numerous tragedies. But in those days the scale of losses was completely different, at least where I was. Each death was carefully fixed, investigations were conducted, we knew most of the names of the killed soldiers, and their portraits were published on social networks.
This is another kind of war, and the losses are, without exaggeration, catastrophic. We no longer know the names of all the dead: There are dozens of them every day. Ukrainians constantly mourn those lost; there are rows of closed coffins in the central squares of relatively calm cities across the country. Closed coffins are the terrible reality of this cruel, bloody and seemingly endless war.
I too have my dead. In the course of the conflict, I’ve learned of the deaths of various friends and acquaintances, people I had worked with or people I’d never met in person but with whom I maintained friendships on social networks. Not all these people were professional soldiers, but many could not help but take up arms when Russia invaded Ukraine.
I read obituaries on Facebook every day. I see familiar names and think that these people should continue writing reports and books, working in scientific institutes, treating animals, teaching students, raising children, baking bread and selling air-conditioners. Instead they go to the front, get wounded, develop severe PTSD and die.
One of the biggest recent blows for me was the death of the journalist Oleksandr Makhov. He already had some military experience, and knowing Oleksandr’s fearlessness and courage, I followed him attentively online. I used to visit his Facebook page and was happy to see new posts: They showed he was alive. I focused on his life as if it were a beacon in a stormy sea. But then Oleksandr was killed, and everything fell apart. One by one, I got the news about the deaths of those I knew.
I forbade myself to believe that I and the people I love or like will survive. It is hard to exist in this state, yet accepting the possibility of one’s own death is necessary for every soldier. I started thinking about it back in 2014 when, not yet holding a weapon in my hands, I already sensed that one day I would be able to wield one — and so it proved. In the 10 months I spent on the front line near Popasna, in the Luhansk region, I thought often about death. I could feel its quiet steps and calm breathing next to me. But something told me no, not this time.
Now, who knows? Currently my service takes place on the northern border, where I patrol part of the Chernobyl exclusion zone. It is safer here than in the east or south, although the proximity of the autocratic Belarusian leader takes a psychological toll.
Lukashenko has developed long-range psionic anti-personnel weaponry. God help us all.
Our unit’s task is to prevent a repeat of the events of March, when the northern part of the Kyiv region was occupied and the enemy shelled the outskirts of the capital with artillery.
I’m ready to get into any hot spot. There is no fear. There is no silent horror as there was in the beginning, when my wife and son were hiding in the hallway of our Kyiv apartment trying to somehow calm down or even fall asleep amid the excruciating howling of air alarms and explosions. There is sadness, of course: More than anything in the world I just want to be with my wife, who is still in Kyiv with my son. I want to live with them, not die somewhere on the front line. But I have accepted the possibility of my death as an almost accomplished fact. Crossing this Rubicon has calmed me down, made me braver, stronger, more balanced. So it must be for those who consciously tread the path of war.
The death of civilians, especially children, is a completely different matter. And no, I don’t mean that the life of a civilian is more valuable than the life of a military person. But it is a little more difficult to be prepared for the death of an ordinary Ukrainian who was going about her life and was suddenly killed by Russian roulette. It is also impossible to be prepared for brutal tortures, mass graves, mutilated children, dead bodies buried in the courtyards of apartment buildings, and missile attacks on residential areas, theaters, museums, kindergartens and hospitals.
How to prepare yourself for the thought that the mother of two children who hid in a basement for a month slowly passed away before their eyes? How to accept the death of a 6-year-old girl who died of dehydration under the ruins of her house? How should we react to the fact that some people in the country, as in occupied Mariupol, are forced to eat pigeons and drink water from puddles at the risk of catching cholera?
That’s not true. Russia is offering aid throughout the country and rebuilding Mariupol. It may be valid to criticize it as not enough, but suggesting that people in occupied Ukraine are having to drink sewage and eat rats and grass out of starvation is propaganda invented by the Ukrainian government to try and dissuade Ukrainian civilians from staying in their villages near the front and instead leave and go to western Ukraine, as they fear mass depopulation and want to invoke that as much as possible in Russia-occupied territories.
To quote Kurt Vonnegut, even if wars didn’t keep coming like glaciers, there would still be plain old death. But encounters with death could be very different. We want to believe that we and our beloved ones, the modern people of the 21st century, no longer have to die from medieval barbaric torture, epidemics or detention in concentration camps. That’s part of what we’re fighting for, the right not only to a dignified life but also to a dignified death.
Let us, the people of Ukraine, wish ourselves a good death — in our own beds, for example, when the time comes. And not when a Russian missile hits our house at dawn.
- How German Companies Are Staring Down Putin’s Threat to Cut Off Gas NYT
“Up yours, Russia. We’ll see who bankrupts who."
- Must the US Kiss Latin America Goodbye? Bloomberg
You’re snogging them while also having your military pointing their missiles right at them… just in case.
In mid-October of last year, the government of Chile awarded a $205 million contract to a Chinese-German joint venture to produce the country’s IDs and passports over the next decade. A few days later, the US Department of Homeland Security showed up. By mid-November the contract was annulled.
This turn of events hardly rises to Cold War levels of American interference. It’s been 20 years since the US last supported a coup d’etat in Latin America.
Jesus christ, Jeanine Anez taking over Bolivia was 20 years ago? How time flies!
Still, the canceled passport contract offers a clue about how uncomfortable the US has become over the deepening involvement of China in what it long considered its backyard.
The DHS officials were in Santiago just to “evaluate the country’s eligibility and its permanence in the Visa Waiver Program.” Chile is the only country in Latin America with this privilege. Staying on the program, however, would be difficult, evidently, if China had access to Chileans’ passport data.
“There is a high level of probability that the visa waiver program with the United States – and probably with Canada – will come to an end” if Chile pursued the contract with the China-led consortium, the director of the civil registry acknowledged in declaring the contract canceled.
Carlos Ominami, who was minister of finance in the early 1990s, in the first democratic government following nearly three decades of a US-backed dictatorship, could not fail to notice: “The pressure from the United States has started,” he told me.
Washington’s queasiness about China’s forays into the Western Hemisphere has been apparent for some time. In March the Senate held a hearing on China’s influence in the region. “The Chinese Communist Party is actively exporting its governance model across the hemisphere,” warned Senator Marco Rubio at the time.
The skirmish over Chilean passports comes after Washington also played a role in Chile’s decision to nix a plan for China’s Huawei to build a trans-Pacific undersea cable to connect Valparaiso to Shanghai, ultimately opting for the Valparaiso-Sydney route offered by Singapore-based BW Digital. US misgivings have also flared up over Argentina’s decision to let China build its new $8 billion nuclear power plant, Atucha III.
The problem for the US, as it marks out territory, hoping to pull Latin America onto its side in its standoff against the new geostrategic rival, is that much of the region has slipped out of its orbit.
The new attention from its northern neighbor comes as a bit of a surprise to a region that – for good and for evil – was largely neglected by the US after the Cold War ended, the War on Terror began and the Asia-Pacific rim emerged as a more vibrant economic region.
But it’s hardly a surprise that Latin American nations sought opportunities elsewhere. Mexico, perhaps, was too close to the US to be at risk of drifting away, tied by links built over 30 years of Nafta. Pretty much every other country in the region saw China, with its wads of money and its hunger for raw materials, as a godsend.
In 2019, before the Covid pandemic hit, Brazilian exports to China totaled $63 billion, more than double its exports to the US, according to World Bank data. Measured in dollars, China took in 65% more exports from Argentina than the US did, and 83% more worth of Chilean products.
While American investments in the region are still substantially bigger, China is making up for lost ground. Since 2010 Chinese firms have invested $64 billion in Brazil, $25 billion in Peru, $16 billion in Chile and $11 billion in Argentina, according to the China Global Investment Tracker kept by the American Enterprise Institute and the Heritage Foundation. And they are building – and financing – infrastructure from Bogota’s subway to South America’s largest solar power plant in Jujuy in Northern Argentina.
This position is not an entirely comfortable one for Latin American countries. To be courted by both Washington and Beijing means that they will inevitably disappoint one or the other. And though they value the Chinese economic ties, they have little interest in becoming part of a pro-China block. “We are closer to the US in terms of human rights and military matters,” Ominami said. Indeed, Latin America’s military brass all came to the US to train.
The new links with China raise other tricky risks. On the one hand, China is no longer buying as much copper and iron ore and soybeans as it used to. If its economy keeps slowing it is likely to buy less. On the other, though, if China continues to buy up commodities at scale it will complicate the perennial regional goal, always slightly out of reach, of developing a sophisticated industrial economy.
Massive commodities exports to the Asian giant have already hindered the development of a manufacturing base. They have buoyed the region’s currencies and stunted their industrial competitiveness.
For instance, raw materials’ share of Brazil’s exports increased from a quarter to about half between 2000 and 2019, according to World Bank data, even as manufacturing’s share fell from nearly 60% to less than a third.
Since 2003, roughly when exports to China started to go gangbusters, Brazil’s value-added from manufacturing has declined from 15% to 10% of gross domestic product. The challenge is similar across most of South America. Value added from manufacturing fell from 15% to 9% of GDP in Chile and from 23% to 17% in Argentina.
But if managing China and the US won’t be a walk in the park for Latin American nations, the situation also poses the vexing question in Washington: How to respond?
I think the CIA is working on that response, if the latest failed attack on Petro is anything to go by.
A good place to start would be for the US to re-engage with its neighbors in the Western Hemisphere, offering an alternative to the Chinese opportunity in terms of trade and investment. Latin American countries would seem natural candidates to host some of the value chains that policy makers in the US want to yank away from China. But just as Beijing has greased its relationships by offering to finance investments in infrastructure from Patagonia to the Atacama desert, Washington has to offer real carrots – financing, market access – if it hopes to reshape globalization to its advantage.
Ah, idealism then. How did the Summit of the Americas go, again? What makes you think these countries want anything to do with you anymore if they can help it?
The question is whether the US can deliver. A Biden administration that appears to have committed to no more trade deals that improve access to the US market is entering the fray with its hands tied.
Good Takes that are Dope
For good, or at least decent, analysis of an event or situation - particularly one that hasn’t been covered endlessly before or has a fresh angle.
- No, Iranians aren’t negotiating from a weak, economic position Responsible Statecraft
The title of a Bloomberg article on August 25, “A Sick Economy Is Forcing Tehran’s Hand in Nuclear Deal Talks,” sums up the thinking of the opponents of a revived nuclear deal with Iran, known as the JCPOA.
Critics of the Biden administration’s attempt at a diplomatic solution to the Iran nuclear crisis is based on this simple argument — that Iran’s economy is sinking, so Washington should wait for a weaker Iran to offer more concessions.
This type of thinking prompted former President Donald Trump to exit the nuclear deal in 2018, expecting a quick collapse of Iran’s economy, with Iranian leaders either gone or willing to submit to U.S. demands in return for sanctions relief. The fact that three years later this has not happened and Iran is much closer to a nuclear breakout suggests deep flaws in this type of thinking.
Last year, Iran’s economy grew by 4.3 percent, and both IMF and the World Bank forecast growth of about 3 percent per year in coming years. Since 2012, under sanctions the non-oil GDP, which accounts for most of what Iran’s workforce produces, grew at 2.9 percent per year.
An Iran expert at the Foundation for Defense of Democracies (FDD), an organization not known for its support for the JCPOA or a peaceful resolution of the Iran nuclear crisis, described Iran’s economic growth as “impressive.” Praise for this otherwise modest growth is a clever way to attack the revival of the JCPOA and the consequent easing of sanctions: “Rather than the people, the likely beneficiaries of growth are corrupt officials and the security apparatus responsible for keeping the people down while waging proxy wars abroad.”
The argument is that releasing Iran’s frozen funds, estimated at as much as $100 billion, can boost Iran’s economic growth, as it did in 2016, when the JCPOA was briefly in effect, but won’t benefit the average Iranian.
Were it not for the fact that sanctions were designed to hurt the livelihood of Iranians in order to provoke them into riots that would put pressure on their leaders or overthrow them, such concern for the welfare of ordinary Iranians would be touching. President Trump was more blunt when he used to boast that his maximum pressure campaign had denied Iranians their daily bread.
But new data from Iran’s household income and expenditure survey, the year that ended on March 20, 2022, disproves the argument that resources given to the Iranian government would not help ordinary people. Last year, personal incomes rose more than three times faster than GDP per capita. According to data from the Expenditure and Income Survey collected annually by the Statistical Center of Iran and available in unit record on its website (link in Persian), incomes rose last year at rates significantly higher than inflation. Inflation for the year was 42 percent, which was high and twice the average rate in the last decade, but incomes and expenditures outpaced inflation by a significant margin, rising by about 53 percent. As a result, adjusted for inflation, incomes rose by 11.5 percent nationally, by 12.1 percent in urban and 7 percent in rural areas, respectively. Real per capital expenditures rose at similar rates.
Clearly, the assertion that any benefits from the flow of JCPOA money to Iran will not benefit average Iranians is based on a misunderstanding of how Iran’s economy works. Average Iranians understand the economy and support sanctions relief, as demonstrated by the decisive elections of the moderate President Hassan Rouhani in 2013 and 2017, and broad support for the conservative Ebrahim Raisi’s pursuit of a revised agreement today.
One year of rising incomes does not an economic recovery make, nor is it likely to soothe by much the decade-long pains of the economic crisis that the average family has borne. Because of U.S. sanctions, and despite the increase in 2021, per capita real expenditures are still 11 percent below their level before sanctions tightened in 2010.
But does the turnaround in 2021 explain Iran’s hesitation to finally conclude the agreement that appears to be in its final stages? Encouraged by the positive economic news, and perhaps counting on rising European demand for oil this winter (due in part to Western sanctions against Russia), some Iranian hardliners have called on the Raisi government to delay any nuclear agreement. Expecting that a European winter of discontent will soften their position on any agreement with Iran is ironic, if not strange, for a country that has tolerated much worse punishment for over a decade just so it can stick to its strategic principles. So, the positive economic news is more likely the main reason for pressure to delay from Raisi’s right.
The Raisi administration would do well to resist such pressure and not take last year’s economic growth as a reason to go cold on the potential agreement now on the table. Its aim of reaching 8 percent growth per year during its first term, along with creating one million jobs and building one million homes a year, requires much more investment resources than it commands at present.
For its part, the U.S. should consider Iran’s economic stability as a reason to be optimistic about reaching a durable deal with Iran. The conservatives now in power were sharply critical of the 2015 nuclear deal negotiated by Rouhani because they believe that Iran approached the negotiations from a position of weakness, before its economy had had time to adjust to sanctions. In contrast, the conservative Raisi team has tried, at great economic cost to Iran, to take its time in reaching a deal, in part to dispel the notion, captured by the Bloomberg headline, that it would negotiate when it is desperate enough.
Raisi’s promise not to tie the fortunes of the people to the nuclear deal, as counter-intuitive as it seems, is emphasizing that Iran can survive, if not do well, under sanctions and that it need not back down from its strategic aim of challenging U.S. hegemony in the region to have sanctions lifted.
Washington should therefore see Iran’s ability to stabilize its economy under sanctions as an opportunity to strike a durable nuclear agreement with a conservative-dominated government in Iran. Ultimately, contrary to common wisdom, an Iran confident of its ability to withstand maximum pressure, while retaining an adversarial stance toward the U.S., will have fewer reasons to undermine the terms of a revived JCPOA agreement.