What We're Watching Today is 1,374 words and a 9-minute read.
Global: Putin signals openness to discuss a ceasefire with Ukraine; rhetorical change unlikely to reflect change in strategy
Speaking at the Eastern Economic Forum in Russia, alongside officials from China and Malaysia, Russian President Putin stated Moscow is open to negotiations, reversing official statements made immediately after Ukraine's incursion into Kursk.
Our Take: President Putin's comments came in advance of Ukrainian President Zelensky's visit to the US and the UN General Assembly, during which Zelensky plans to press forward Ukraine's peace plan that calls for a complete withdrawal of Russian occupation forces from inside Ukraine. With the war past the two-and-a-half-year mark, there are increasing calls for negotiations as the costs mount. Putin may feel some pressure from his allies to agree to talks; however, there are no indications that the Kremlin has changed strategic objectives. Putin continues to reference the terms of the aborted negotiations in Turkey in 2022.
Read More: Reuters, EU Today, Council on Foreign Relations
Europe: Czechia presents plan to replace Russian gas supplies to Austria, Hungary and Slovakia
With the gas transit agreement between Ukraine and Russia expiring at the end of the year, Czechia's trade minister has proposed that reverse gas flows through Czechia could be used to replace Russian gas that currently transits Ukraine.
Our Take: The EU approved a carve-out agreement to permit Austria, Hungary and Slovakia to continue to receive Russian gas while the rest of the EU banned Russian gas through other pipelines. The carve out was intended to be temporary to enable the impacted countries to identify alternative sources and develop the support infrastructure. Ukraine is forcing the issue by declining to negotiate an extension of the transit agreement with Russia and imposing sanctions on Lukoil. The European Commission believes there are alternative sources to maintain energy security in the central eastern member states and is highly critical of new gas deals Hungary has signed with Russia. Hungary and Slovakia have clung to the existing supply relationship with Russia, benefiting from the lower costs. The dispute with Hungary and Slovakia is creating friction within the EU, which risks spilling into EU member states' debate on future sanctions against Russia.
Read More: Euronews, Politico, Center for European Policy Analysis
Middle East: US and Iraq on brink of deal for US troop withdrawal
Iraq and the US are reportedly close to inking a deal that would structure the withdrawal of US-led coalition forces from Iraq, including the removal of hundreds of US troops within the first year.
Our Take: US withdrawal from Iraq, where it has posted thousands of troops since entering the country in 2014 to counter the Islamic State, is a longstanding political riddle for both sides. Both sides want US troops there to help stabilize regions of country partially controlled by Iran-backed militias, but the US has long wanted to disentangle itself from internal Middle Eastern conflicts, and Iraq has called several times for the US to withdraw, mostly as a bid for domestic political stability as the country's government and military includes pro-Iran elements. The deal could reportedly include some US troops staying on in an advisory role. The plan could remove a thorn in the side of the bilateral relationship, but also risk destabilization in Iraq, especially as ISIS has been gaining strength in the last year.
Read More: Reuters, Middle East Monitor, Quincy Institute, Arab Center Washington DC
Americas: Obrador aims judicial reform at foreign businesses
Mexican President Obrador confirmed that his controversial judicial reform plan, which would make all judge positions popularly elected, is indeed aimed at curbing "foreign companies," reversing arguments by his successor that the plan was neutral and fanning foreign anxieties about the impact of the law.
Our Take: Foreign businesses, alongside foreign governments, have long argued that the controversial reform would degrade the country's business environment by creating long-term legal uncertainty and introducing domestic political turmoil. The specter of the reform has already spooked markets, sending the peso on a rollercoaster in recent weeks. For the most part, Obrador and his successor, President-elect Sheinbaum have appeared unmoved in the face of international pressure and internal dissent, including strikes, but the Mexican opposition has recently claimed to have the votes to overturn the measure.
Read More: Associated Press, Bloomberg [paywall], Bloomberg [paywall], Mexico Business News
Asia-Pacific: Thailand's king swears in new government
The king of Thailand, Maha Vajiralongkorn, on Friday swore in the new government of Prime Minister Paetongtarn Shinawatra, following a period of political turmoil in Southeast Asia's second largest economy.
Our Take: The swearing-in of Thailand's new Prime Minister Paetongtarn Shinawatra signals a fresh chapter for the country, which has endured political instability and economic challenges. As the youngest prime minister and a member of the influential Shinawatra family, Paetongtarn faces significant pressures, particularly in navigating Thailand's sluggish economy and managing expectations around reform. The coalition-based cabinet, with diverse political affiliations, may lead to internal challenges in governance, potentially complicating policy implementation. For investors and businesses, this transition introduces both opportunities for economic recovery and risks tied to potential political infighting and instability.
Read More: Reuters, Council on Foreign Relations
Trade & Compliance: US imposes new sanctions on Russia's Arctic gas project
The United States on Thursday announced new sanctions on companies and vessels linked to Russia's Arctic LNG 2 project, marking Washington's latest attempt to economically censure Moscow for its invasion of Ukraine.
Our Take: The US sanctions on companies and vessels linked to Russia's Arctic LNG 2 project mark a strategic move to limit Moscow's ability to generate revenue and resources amid the Ukraine conflict. By targeting key logistical players involved in liquefied natural gas exports, the US aims to disrupt Russia's broader energy ambitions, which rely heavily on the Arctic LNG 2's project output. Despite efforts by Russia to circumvent sanctions through deceptive shipping practices, these actions signal Washington's commitment to imposing stricter oversight and costs on Russian energy operations. For global energy markets and companies involved in LNG, the heightened sanctions increase uncertainty and raise risks for any dealings connected to Russian projects, potentially tightening LNG supply.
Read More: Reuters, US Department of State, Foundation for Defense of Democracies
Disruptive Technology: US, UK, and EU to sign first international agreement on AI standards
The United States, United Kingdom, and the European Union on Thursday signed the first legally binding international artificial intelligence (AI) treaty during a Council of Europe conference held in Lithuania.
Our Take: The signing of the Council of Europe's international AI treaty marks a significant step toward the global regulation of AI, aiming to safeguard human rights while promoting responsible innovation across both public and private sectors. Unlike the EU's AI Act, this treaty has a broader international scope, allowing non-EU states like the US and UK to join, with the potential to create a more unified global approach to AI governance. However, concerns over its enforceability and exemptions for national security and private companies may lead to inconsistencies in how it is applied across jurisdictions. For businesses operating globally, this emerging regulatory framework highlights the growing legal risks associated with AI and underscores the importance of aligning AI practices with both regional and international standards to mitigate compliance issues.
Read More: Euronews, Reuters, World Economic Forum
Climate: Drought conditions in the central US reduce the flow of the Mississippi, increasing risks to barge transport
Bloomberg reported that dry conditions in the Ohio River basin, which feeds into the Mississippi River, are sparking concerns about disruptions in barge traffic, risking increased shipping prices and lower shipping tonnage.
Our Take: While this is the dry season, with the Mississippi normally experiencing lower water levels, concerns over extreme weather and extended dry conditions have barge companies making early announcements on limits on draft and the number of vessels towed. In 2022, the Mississippi experienced extreme drought, with 2,000 barges stuck in the mud. Barge rates tripled their three-year average. The drought was estimated to cost $20 billion on lost economic input for the US. The Mississippi is a major artery for the export of US soybeans, wheat and corn – close to 60% of US grain exports; prolonged drought poses significant risks to the US economy and global food security.
Read More: Bloomberg [paywall], Freight Waves, Waterways Journal Weekly
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