EP 212 | Daily Global Insights | Jul 27, 2021 | US News | India News | Global News | Markets

Sree Iyer: Namaskar, Welcome to Daily Global Insights with Sri and Sree, Episode 212. Today is July 27th, Tuesday, and here are the global news items, Taiwan temptation keeps the US guessing about Xi’s true Intention. Pentagon must pick up the pace to counter China, Top US General Warns. Japan fumes as Russian Prime Minister talks of Free Trade zones on the Kuril Islands. Sridharji, namaskar and welcome to PGurus Channel.

Sridhar Chityala: Namaskar, Good morning to everybody on this bright, Tuesday morning, and looking forward to another exciting, 20 to 30 minutes to discuss various topics on Daily Global insights.

So, obviously, Taiwan features a right on top of the agenda, the temptation of Taiwan seems to be overbearing for China. What exactly is the move that China is going to make keeps the US armed forces and the US think tank guessing as to what would be the move. This is a post of the discussions that happen between Wendy Sherman and the deputy Chinese foreign minister. And there’s a warning signal coming from the vice-chairman of the Joint Chief of Staff, John Hynet, John Hynet is the vice-chairman and the joint chief of staff. And he is saying that the Pentagon or the US Armed Forces has spent a lot of time, combating for the past 20 years dealing with terrorists and unknown enemies in the desert of Afghanistan and Iraq. You know fighting a known enemy is a country and you know which has got a defined Mission with far more, combative capabilities like China requires war preparedness and the US Pentagon needs to really rev up its efforts to be ready to take on any looming battle that is likely to come.

Now with regard to Russia, you know Russia on the Northern tip of Japan is trying to establish we covered in the Kuril Islands you know the three islands which make up. They redrew the Border in 1945 and staked a claim for those three islands which is right on the tip of the Hokkaido Peninsula. So the story is the Prime Minister has visited the Island, he is made a statement that he wants to convert this into a free trade zone which sent shivers to the spine of the Japanese. Japan has been contesting, that this has to go back to the old boundary and when you actually look at it, it does make a lot of common sense in terms of why it belongs to Japan rather than the Russian point.

Sree Iyer: CIA Chief warns the Taliban is in the strongest military position in decades. The US wants Federal Aviation Administration, a travel warning over the Afghan region. Now, how many corridors are open between the US and other countries? Sir, do you have any idea?

Sridhar Chityala: Now I think that this is very specifically they have to fly, you know, especially to go to West Asia as well as to the South Asian region necessarily they have to fly over the Afghan region. The warning that is coming through is, you know, one of the questions that we had raised yesterday was waiting for the airstrikes of the US to come from, you know, especially if they have no troops on the ground and no planes on the ground in Afghanistan. So military aircraft is probably flying, so which is the reason why they have cut off that perimeter, which is to say that, you know, this is a no-fly zone for a commercial airline. So, therefore, that is what the Federal Aviation Authority has warned that no flights over the Afghan region and it are preserved for the military purpose.

Now, the other more striking point here is if the CIA is warning based on all the intelligence from Mr William Burns recall that Sreeji had talked about his, you know, quite a quick visit to Pakistan for two days. We don’t know the outcome, but of those discussions and his visit, but the fact is that he’s making a statement yesterday, that is to say, The Taliban is far more compact and battle-ready and far more fully equipped to deal with issues on the ground.  It just also begs the question 20 years, the United States has been on the ground so which means what has happened? They allowed the Taliban to build up, selling we are the narcotics trade, build-up, huge set of capabilities, you know, without diminishing those well on the ground,  it begs the question.

Sree Iyer: Iran is taking advantage of the lull in nuclear talks with the US to get dangerously close to a nuclear weapon. And there must be a deadline to return to negotiations. Israeli officials have warned their American counterparts. Where is Naftali? He is been quiet for a while. Jordan has been hit by Iranian drones claims King Abdullah of Jordan. Jordan cannot be a Palestinian Homeland in a two-state solution. Your thoughts on, where in the world, Naftali Bennett might be?

Sridhar Chityala: Naftali Bennett is very much enjoying his stint as the Prime Minister of Israel. He has blamed and his predecessor and his mentor, Benjamin Netanyahu, for Iran’s development of nuclear capabilities. If you recall that, you know, that we have been covering in DGI  that, you know, there has been progressive but diminishing of the capabilities and the delay of the centrifugal capabilities for it to build a nuclear weapon, but it looks like Iran is almost imminent which is the reason why they are refusing to discuss with France.  France is also raising the issue that they’re not coming to the negotiating table so Where is Naftali Bennett has now not only blame Benjamin Netanyahu but he you know, summoned his Defence Minister, as well as his Foreign Minister. So they’re trying to tell the United States, look, you got to do something about this. Now this is the same Naftali Bennett who said he would not see a nuclear-armed Iran, and Israel reserves the right to take the appropriate action. So, it is very sobering thought to assume that he’s now saying, oh, United States come and help us, oh, the world come and help us while Iran is Saying, flexing, its muscles and basically saying I’m ready, I couldn’t be bothered to be negotiating with you.

Sree Iyer: After dismissing, the Prime Minister, Tunisia Presidents, sack the Defense minister as a nation plunges into chaos. Nigeria, Tanzania and Niger region continue to fight the terrorist groups amid daily, streaks of incidents. Sir, this is something that you have warned of a few weeks ago.

Sridhar Chityala: Well, I think that Sorry’s sir, before I start, I want to touch on Jordan. And then we get into this. The Jordan has suddenly become part of this, remember that triple “I”  is the fulcrum point. Now, you can see that you know, Iran, Iraq lead into Jordan and Jordan is now has received drone attacks but suddenly known behold, apparently King Abdullah, Jordanian King has raised the issue a, you know, Jordan is not the resolution model for the two-state solution, for the Palestinians. There’s a significant amount of Palestinian people in Jordan, who are employed within Jordan but that’s not the substitute. So there is another lurking issue that is looming their way from where this is coming, we don’t know, but certainly, he has raised the issue.

As far as coming back to the Sahel region, we can begin to see that there is every day there are incidents. Niger is the Burkina Faso region and then you have Nigeria where you have had the Boko Haram incidents in terms of people being abducted from schools, girls being abducted and then release etcetera. So you have and then Tanzania where you have these Islamists forces, fighting the government. So you have in a continuous stream of incidents, almost every day reported, we just alerting that there are activities taking place here. And is this another kind of fulcrum point for something to break out remains to be seen as the United States makes a withdrawal from Iraq? It is almost absent in Syria and they make a withdrawal in Afghanistan. What’s going to happen to all these regions. If you go back in time, these were the regions where the, whatever the different names of ISIS, Al Qaeda were active once upon a time.

Sree Iyer: Europe, looking at travel restrictions as Delta variant cases rise.  The US is looking at opening travel to UK visitors. The US maintains restrictions on European travel amid the virus surge. Singapore is set to allow quarantine free travel from September with the country set to fully vaccinated 80% of its population over the next two months. So some countries are well on their way to vaccinating their entire population. I mean that is the landmark that everyone should look to achieve isn’t it, sir?

Sridhar Chityala: Absolutely, if you recall EU was contemplating opening up the air corridors for Europeans, especially the US visitors to travel and come by and the economy to open up, but it looks like EU, with Delta very advising in many places, you know, they’re trying to shut down. Just for people for the record, the United Kingdom, today has the number two active cases in the world. Number one is the United States at 5 million-plus and the United Kingdom is somewhere close to a million Active cases today as we speak. So, just to give you a number India is just less than 400,000 active cases to put things in perspective. Now, then you compare the populations, the United Kingdom compared to the United States or India. So you just give you a context their Delta variant is very profuse and embedded within many facets of the population, so which is where the worry is coming from.

Now, Singapore is done the right thing which says that from September, they will now allow quarantine free travel by which time they will have 80% of the people who have been vaccinated because they have also seen a rise in the Delta variant cases. If you are fully vaccinated 80% of the population is vaccinated the possibility of contraction and the epidemic spreading is very small. So I think as you rightly said that’s the right Benchmark that the world has to follow.

Sree Iyer: Let’s take a look at India News. Now the situation remains precarious in Afghanistan with the Taliban making territorial gains and India has backed constitutional continuity in Kabul, in case of any power-sharing pact. Afghan government informs India, that Lashkar-e-Taiba is shifting base to Afghanistan. Afghan Army Chief postpones visit to India as the Taliban war intensifies. There seems to be an intensification of the Taliban attacks on the Afghan forces. Now, people have been accusing, the neighbour of abetting, this and the United States also is striking back with drones. Where do you see this thing headed, sir? I thought that there was some sort of control that was established, the line was established, but looks like again, it’s opening up.

Sridhar Chityala: So where do I see this heading?  I think there will be some chaos before there’s a stop before the lull or in an instance, there is no lull before the storm, you know, the lull has passed, there has been a storm and I think it’s going to blow over. Now, everybody is backing a constitutional mechanism. Taliban, we have reported again in DGI, Taliban itself has supported power-sharing, except they have put a condition which is namely to say, they do not want to have the president, the president Ashraf Ghani to be part of that Administration, they put that condition. So we will see some form of constitutionally backed Taliban also wants to have, you know, be in power and administering. So they may be a constitutional amended Administration. What that would look like? And how long would that last is a big question? But the Taliban is not used to sharing Power. It believes in control, it believes in the unilateral, imposition of rules as it sees it. And this clearly there’s trouble brewing in Afghanistan, there may be some temporary impasse, but then eventually, I think we are going back to see the issues.

As far as these neighbours of Afghanistan are concerned whether they would have any hold any sway, the chances of what happened pre  9/11 versus today post-2021, or 2021 could be different where the Taliban may say I can take care of myself, I don’t need anybody’s help.

Sree Iyer: Rajnath Singh to visit Tajikistan for the SCO Shanghai cooperation, I think. National Security Advisor and Foreign Ministers meet were the other two meetings held. Indian Army pays tribute to Kargil soldiers at the Dras War Memorial. So let’s get back to SCO. Why is it taking place in Tajikistan this time?

Sridhar Chityala:  Tajikistan is holding the chairmanship for a period of two years. So, most meetings are being held in Tajikistan. So we had the Foreign Ministers meet, there was also the other initiatives. So now they are reassembling for the Defense Minister meet. India continues to engage and participate. Remember an SCO has Russia, has China, also has Pakistan but it holds its position very firm in terms of its fundamental principles. You saw that Dr Jaishankar make the point especially on the terror issues as it relates to Pakistan as well as the unilateral status quo Change as far as the Border issues are concerned, India has not, you know, let its flag down and it has been very firm. But it’s allowed it to discuss and dialogue and be part of the setup. India enjoys a very good relationship with Tajikistan and Uzbekistan and so on and so forth. The foreign ministers have repeatedly visited those countries.

Sree Iyer: Anthony Blinken’s India visit, wide-ranging issues, continued Pakistan support to terror groups, regional security situation stemming from the Afghan pullback, assessment of Indo-Pacific security. QUAD in-person meeting in the United States later this year, QUAD vaccine initiative and QUAD foreign ministers meet and other areas of cooperation, that’s quite a bit that Blinken would like to go over India. I’m glad to see that at least the human rights thing appears to be off the table. There never was an issue. This is a hyperbole created by vested few.

Sridhar Chityala: There are two things. One is, by and large, the media and the people are very gullible. So has there been a formal press statement issued by Antony Blinken which says he is going to raise the human issues? That is the number one agenda. Has he issued a press release? No. He has not issued a press release. So, therefore, the media is engaged in this active engagement of their assertions and their principles and their self indulging agenda that they want to impose what they think and create this confusion. Whereas the agenda of Mr Blinken is very clear. The United States has got a number of problems. It is leaving Afghanistan. The dialogue that Afghanistan is having is more and more with India. So he needs to get an assessment, how India is to deal with. So that’s one of the first items that they’re going to talk about and that’s one of the biggest items that they are going to talk about.

Second, they are going to talk about what’s going to happen on the Indo-Pacific side of the ledger because right now, India has not featured in any of these multilateral, bilateral, trilateral discussions that have happened between the United States, for example, the United States and Japan, the United States and Korea. Lloyd Austin is visiting the Philippines, Vietnam, and Singapore. What’s happening in that? So there has been a separate dialogue that is conducted with India around the Indo-Pacific which makes one conclude that they want to deal with this whole China thread in a different manner by revving up the different regions. And probably, Indo-Pacific is India’s responsibility. I’m only inferring, I’m not saying that is the position of the United States.

Then, there’s a QUAD meeting that is taking place later this year at the leaders level. The last meeting was in March which was purely online. Again, you can see the agenda, the agenda is around the vaccines, it’s not about the security, but they want to have that meeting. So there’s a preparatory work and he’s got time with the prime Minister of India as well. And then the broad area of co-operation which India and the United States have from defence to other domains. So, nowhere there is this question of human rights being the priority. The world is burning and when the world is burning, the last thing that we want to discuss is an issue that is relegated to probably the hundredth item in the back burner.

If you ask, what is the no 1 issue in the United States, today? The number one issue is the Infrastructure Bill. What is the number two issue? More and more surges to happen around the border. Nobody is talking about Anthony Blinken bringing United Nations fellows to discuss the minority issues and whether there is discrimination etc. But that’s probably the 15th item on his agenda. So this is basically a revving up irrelevant kind of agenda. I’ve even seen Alicia Ayles, who was formerly in the Department of State writing that it is good that he brings up all these things. How long these people are going to talk about integration. This is not an India-US dialogue issue. There are other things to focus on.

Sree Iyer: China Border Security – With a focus on border connectivity 73 critical roads are being developed along the Indochina border on a priority basis by India. India is also developing 33,000 kilometres of natural gas pipeline to create a national gas grid. The unemployment levels rise to 7.14% and with covid-2 lasting longer exports will be the one factor that will be driving India’s recovery say, experts. India’s tariffs drop to 15% from 17.6% in a positive development with import substitution. The number is still higher than the 13.5% in 2014. Your thoughts, sir, before we go on to the US news. We are running a little bit late, we need to pick up some speed, sir.

Sridhar Chityala: Okay great. So basically the conclusion is that India has organized itself fairly well from infrastructure on the border side. Natural gas is a long-cherished move which is to dispense. So I think they’re creating infrastructure around that. The tariffs is basically the PLI program seems to be making a positive impact so there is no need for tariffs to mitigate any imports and create an imbalance in the import bill. So India is on the move on that front as well.

Sree Iyer: In United States news, the House select committee investigating the deadly pro-Trump invasion of the United States capital will hold its first hearing on Tuesday. 4 cops will testify first. We must remember that Nancy Pelosi chose 2 Republican congressmen who are critical of Trump. So essentially people are looking at it as if saying that this committee is loaded. Let’s see how it plays out. House minority leader, Kevin McCarthy is branding the two Republicans serving on the select committee investigating the Jan 6 riots at the US Capitol as Pelosi Republicans. Sir, your thoughts.

Sridhar Chityala: I think that this is another attempt by Nancy Pelosi to somehow come up with a predetermined conclusion. You predetermine what you want to get out of it, and you run the agenda. I think this is going to be another forecast which is going to come to conclusion and people are going to have a laugh at it rather than focusing on more pressing issues that the nation is facing. You give it to an investigation agency, they will deal with it and then you are done. Why should you have a house investigation committee? And then, run this rift going on for I don’t know how many days. But anyway, my conclusion is that Adam Kissinger who we talked about and Miss Chaney are not the stellar stalwarts of the Republican party. They already have opinions on Trump, so we can see which way this outcome is progressing.

Sree Iyer: Nancy Pelosi will go down as the one person who impeached a US president not once but twice. That would be a very dubious record but that is done and dusted. Maybe she’s looking for a three-peat. Let’s wait and see. Trump urges Republicans to reject the infrastructure deal and says, ‘don’t let the radical left play you for fools.’ This infrastructure deal, in my opinion, it’s a good thing, sir. I could be wrong. Your thoughts.

Sridhar Chityala: My thoughts are that $579 billion extendable up to $1.2 trillion is a good deal because it itemizes and focuses on specific areas. But the government track record of investing, managing such large pools of capital in the United States is very poor, abysmal. So we already have $6.5 trillion in the budget that we have expended and that needs to be added to the debt. To lift the debt limit from 22 trillion to 28.5 trillion adding the 6.5. It remains a question mark, where is this money gone? So now you’re going to add, according to the Republicans, they want to add $2.1 trillion-plus a $3.5 trillion deficit budget. I think, to me the numbers are mind-boggling, Sreeji.

Sree Iyer: Beijing accuses the US of wrongdoing at the meeting in China and hands over lists. China also presses the US to drop sanctions. The US calls on China to be a responsible power. I mean, China will ask even for the moon. President Biden and Iraqi prime minister, Mustafa Al-Kadhimi announced on Monday an agreement to reduce the number of US combat troops in Iraq. By the end of the year, from combat, it will go down to advisory. This is in Iraq. US and 20 nations urge the Cuban government to treat Cuban protesters for the legal rights of the land. So looking at what is happening in Iraq, the US is going to withdraw from Iraq. So the III that we’ve been talking about, the two eyes will get a lot more emboldened and that can only mean trouble for the other eye.

Sridhar Chityala: Exactly. The three eyes are the new pivot in the greater West Asian region. If you very carefully see the West Asian countries, which created the Abrahamic accord under Trump are silent. They are not part of the discussions. They are all focused on economic development. Whereas these three eyes, always one eye is going to be engaged. The three eyes are going to be the epicentre. Unnecessarily, they have brought Jordan into the ledger with the Palestinian resolution. As you rightly said, there is no whole spot once the US forces leave.

Sree Iyer: Border patrol apprehended over 20,000 illegal immigrants in one week in the busiest sector. Texas Troopers bolstered by out of state troopers on the Border. This helps at least to contain the inflow in Texas. Your thoughts on this. Why isn’t Kamala Harris, the Vice President coming out and making any statements regarding this?

Sridhar Chityala: She doesn’t want to have any controversy, any failed actions being stuck on her given the present state of Mr Biden’s health. So, therefore, I don’t think she has been playing a very cautious role. She has her own aspirations. You can see her poll numbers have dipped quite dramatically. We will discuss that another day for want of time. But basically, she has kept aloof and most of the action has come from Texas, the Texas Governor and the Texas Attorney General backed by several Republican states who have supported Texas in mitigating the Border issues that is emanating from this surge.

Sree Iyer: France warned the United States in 2015 about the Wuhan lab it helped build, Former covid-19 investigator claims. Biden to Virginia, Veterans Administration Doctors vaccine mandate is coming. Americans are mixing and matching the vaccines over Delta variant concern. So there is still a little bit of uncertainty in the United States over the efficacy of Pfizer and Moderna on the Delta variant, isn’t it? Whereas Covaxin appears to be doing quite well.

Sridhar Chityala: Covaxin and Covishield, both appear to be doing very well as far as India is concerned. And same AstraZeneca seems to be, at least in the countries where it has been… Israeli medical group or the Department of Health Sciences in Israel has been consistently stating that the efficacy of the Pfizer – BioNTech is around 55% less than 60%. So obviously that data has not come out in the United States, except what has come out in the United States is that perhaps there is a need for a booster as we step out of summer and step into winter. That’s one thing. The second is that still only 54% of the population is vaccinated, the target was 70%, In some states, it is greater than 60%, in some states greater than 80%,  Active cases are due to Delta variant. This is an alarming number. We have been saying this for the past two weeks or three weeks that this more Active cases in the United States. If the US doesn’t take then we’re going to have another pandemic and shutdown. Already, we are going to have a mask mandate, not that anybody listens, but we could soon have other types of mandates coming because the variant is active. Hence the reason for this mixing and matching that is going on, sir.

Sree Iyer: Let’s take a look at Markets now. The S&P ekes out another record as investors gear up for Tech earnings. Elon Musk’s electric vehicle company, Tesla, beat expectations on both the top and bottom lines and pass 1 billion in quarterly net income for the first time. A tenfold increase since last year. Bitcoin tops 40,000 for the first time since June as the cryptocurrency rallies. The housing boom is over as new home rates fall. Sir, with your permission, I will start with the indices numbers. I have the graphic up there. The Dow Jones is up, S&P is up, and so is the NASDAQ.

Sridhar Chityala: Well, just to put things in perspective, we said, the Futures were down about yesterday morning when we discussed and during the course of the day the Dow dropped about 100 points. You can now see that it has made its way back to 82.76 because usually, it is like a heard. Once you have one tech company announcing the results we have the rest of the people generally following a similar trend. The Tesla results were outstanding. Some of the other results that came out were very good. So there’s still a positive earnings momentum. So the question that was asked is to summarize in the interest of time, that basically the markets are prepared to let go of inflation, covid, Delta variants, the housing boom being over but still focused around earnings and willing to reward the companies. That is why you are seeing the markets climb with a mindset isolated from these issues. So that’s my read on the market indices.

With regard to Bitcoin, the data is basically showing, on a given day how the variability has been. It went up 30% over the weekend and from 30,000, it went to about 40,000 and it settled around 38,000 – 39,000 as we speak. So, Bitcoin, crypto is back and you will begin to see it continues to chug along as we had predicted early this year. So, that’s the conclusion on the markets.

Sree Iyer: With that, we bring today’s DGI to a close. We’ll be back again tomorrow, bright and early. Namaskar.

Sridhar Chityala: Namaskar. Thank you. Have a wonderful day.