This week, Israel continued its airstrikes against Lebanon and Gaza, as the U.K. proposed increasing sanctions against West Bank settlers and members of the U.N. General Assembly repeatedly called for a cease-fire. Russia expanded its nuclear doctrine while Ukrainian President Volodymyr Zelenskyy visited the U.S. to discuss a roadmap to victory in the conflict. In the Indo-Pacific, a Russian aircraft breached Japanese airspace for the first time, and China conducted its first intercontinental ballistic missile test in 40 years. The U.S. announced new partnerships in the region to increase resiliency for critical infrastructure and the critical minerals supply chain.
Weekly Forecast Monitor: Sept. 27, 2024
The Geopolitical Hotspots Monitor examines the outlook for key geopolitical hotspots around the world.
1 Middle East
Summary
Tensions in the Middle East trended toward military and hybrid escalation scenarios as Israel intensified its air campaign against Hezbollah and considered a ground invasion of Lebanon. The U.K. considered additional sanctions against Israeli settlers in the West Bank, and Israel conducted a demolition campaign in Jenin and Tulkarm.
Forecast indicators
Military escalation scenario
- Iran is facilitating negotiations between Russia and al-Houthi militants for the transfer of Russian antiship missiles to them.
- A high-intensity Israeli air campaign against Hezbollah has killed over 600 people and displaced thousands in Lebanon. Several Hezbollah commanders were among the casualties, along with an unknown number of civilians.
- Multiple senior Israeli security officials have indicated that Israel will continue high-tempo offensive operations against Hezbollah and that a ground invasion in southern Lebanon was being considered.
- Hezbollah bombarded northern Israel with rockets and targeted Tel Aviv with a ballistic missile, which was intercepted by Israeli air defenses. Militias in Iraq launched numerous drones toward Israel, one of which struck the port of Eliat.
- Israeli air defenses intercepted a missile fired from Yemen toward central Israel.
- Israeli airstrikes killed dozens of Palestinians in Gaza. Israeli soldiers and Hamas militants battled across the enclave.
Hybrid escalation scenario
- Israel is using bulldozers to demolish civilian infrastructure, including roads and private businesses, in the West Bank towns of Jenin and Tulkarm.
- The U.K. is weighing new sanctions against Israeli settlers in the West Bank.
- Israel conducted an armed raid against the Al Jazeera office in Ramallah and ordered a 45-day closure.
Diplomatic de-escalation scenario
- Israeli Prime Minister Benjamin Netanyahu has rejected a proposed cease-fire between Israel and Hezbollah put forth by U.S. and French officials.
- U.S. President Joe Biden continues to press for a cease-fire and hostage release deal in Gaza.
2 Russia/Ukraine Conflict
Summary
Tensions in the Russia/Ukraine conflict trended toward military and hybrid escalation as Russian forces captured additional territory in Donetsk. The U.S. announced another tranche of military aid while Ukrainian President Volodymyr Zelenskyy visited Washington.
Forecast indicators
Military escalation scenario
- Russian President Vladimir Putin announced updates to Russia’s nuclear doctrine that include possible nuclear retaliation in response to conventional weapons use against Russia by a nonnuclear country.
- The U.S. announced a military aid package to Ukraine worth over $8 billion in conjunction with Zelenskyy’s visit to the White House.
- Russia increased its 2025 defense spending budget to $142 billion, up $30 billion from this year.
- Ukrainian security forces detained suspected members of a sabotage group in Odesa that had been recruited by Russian intelligence.
- Russian forces captured a several villages as they continued to advance toward the logistical hub of Pokrovsk in Donetsk.
- Ukrainian forces captured 24 Russian soldiers and killed dozens of others in a counterattack in the Kharkiv region.
Hybrid escalation scenario
- As the White House considers lifting restrictions on Ukrainian strikes deep into Russian territory using NATO-supplied weapons, U.S. intelligence agencies warned that Russia may retaliate through increased covert sabotage operations in Europe and lethal action against U.S. forces stationed on the continent.
- Russia is deepening its security relationships in the Sahel through a deal to provide telecom service and satellites to Mali, Niger, and Burkina Faso. All three nations have previously turned to Russia for security assistance in combating Islamic extremist groups.
- According to Ukrainian officials quoted by Reuters, nearly 60% of foreign parts used to build Russian weapons used against Ukraine are sourced from China.
Diplomatic de-escalation scenario
- During a visit to the U.S., Zelenskyy pressed Biden for security guarantees as part of the Ukrainian “Victory Plan” to strengthen the country’s position in anticipation of future peace talks with Russia.
- Zelenskyy rejected an alternative Chinese/Brazilian peace initiative for Ukraine and Russia.
- Qatari-led mediations resulted in the return of nine Ukrainian children who were taken to Russia in the opening days of its invasion of Ukraine.
3 U.S./China/Indo-Pacific
Summary
Tensions in the Indo-Pacific trended toward a military escalation scenario as a Russian aircraft breached Japanese airspace three times. Beijing test-launched an ICBM for the first time in four decades. Leaders of the G7 called for the participation of Taiwan, and the U.S. launched new partnerships in the Indo-Pacific aimed at improving resilience and de-risking from the critical minerals sector.
Forecast indicators
Military escalation scenario
- A Russian military aircraft flew into Japanese airspace near Rebun Island near Hokkaido three separate times, prompting aircraft from the Japanese Self Defense Forces for the first time to use flares to ward it off.
- Reuters, citing unnamed European intelligence sources, reported that IEMZ Kupol, a Russian subsidiary of state-owned weapons manufacturer Almaz-Antey, is suspected to be developing and testing a new model of an uncrewed aerial vehicle in China with the help of local specialists.
- In a first for the Japanese navy, one of its destroyers sailed through the Taiwan Strait. The ship was accompanied by counterparts from Australia and New Zealand.
- Despite calls from China for its removal, the U.S. said it intends to keep its medium-range Typhon missile system, which had been sent to the Philippines for a joint exercise in April, in the country.
- The China North Industries Group Corporation Ltd., China’s top arms contractor, has unveiled an ultra-long-range drone capable of outperforming its U.S. counterpart, the “Switchblade.”
- The U.S. is deploying the USS Preble, a destroyer equipped with laser-based anti-UAV and antimissile systems, to Yokosuka, Japan.
- China’s People’s Liberation Army conducted its first intercontinental ballistic missile test launch in 44 years after giving the Pentagon advance notice.
- Taiwanese President Lai Ching-te has announced the creation of a civilian support corps for the military, which will require the training of 400,000 Taiwanese civilians.
- Taiwan’s Ministry of National Defense tracked 86 Chinese aircraft and 34 naval vessels around the island, with 66 aircraft crossing the Taiwan Strait median line.
Hybrid escalation scenario
- Japan and South Korea have both launched anti-dumping investigations into Chinese steel exports.
- China has identified a Taiwanese group nicknamed Anonymous64, which it claims is hacking mainland websites in an attempt to “defame” it.
- Members of the G7 issued a joint statement affirming their support for Taiwanese participation in its summits.
- The European Commission challenged China’s investigation into EU dairy products at the World Trade Organization.
- The U.S., along with 14 other countries and the EU, launched the Mineral Security Partnership Finance Network as part of efforts to counter China’s hold on the critical minerals market.
- U.S. Department of Defense official Jedidiah Royal announced the U.S. will establish an Indo-Pacific resilience partnership with regional and European allies.
Diplomatic de-escalation scenario
- In an attempt to mend strained relations, Jim Chalmers made the first visit to Beijing by an Australian treasurer in seven years.
- The Indian government has invited political and military officials from Myanmar’s ruling military junta to attend a seminar in an attempt to restore relations. The countries share a number of infrastructure projects.
- Vietnamese and U.S. companies signed partnership deals in the semiconductor, oil and natural gas, and aviation sectors during Vietnamese leader To Lam’s visit to New York.
4 Other Hotspots
United States
- Congress approved a short-term spending bill to avoid a government shutdown.
- In a sign that former President Donald Trump and Republican Party strategy was moving toward shoring up support among his base and away from courting undecided voters, he ramped up rhetoric targeting Haitian immigrants.
- Speaker of the House Mike Johnson demanded in a public letter that Ukraine fire its ambassador to the U.S., claiming Zelenskyy’s visit to the U.S. was designed to help Democrats ahead of November elections.
Venezuela
- A federal court in Argentina issued arrest warrants for President Nicolás Maduro, Interior Minister Diosdado Cabello, and 30 other high-ranking members of the Venezuelan administration on charges of crimes against humanity. Argentina’s move indicates that Venezuela’s diplomatic relationships with other Latin American states may be deteriorating.
South Africa
- In an address to the 79th U.N. General Assembly, South African President Cyril Ramaphosa reaffirmed South Africa’s support for Palestine, called for U.N. Security Council reforms to include a permanent seat for an African representative, and laid out his vision for a South African-chaired G20 in 2025. Ramaphosa’s address highlights his ambitions for South Africa to solidify its role as a continental leader, be a representative of the Global South, and assume a more prominent role on the global stage.
‘The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
1
U.S.
Nuclear Power/ Tech
The restarting of the Three Mile Island nuclear plant will revive a source of low-carbon electricity, helping Microsoft achieve its decarbonization energy goals and providing economic and environmental benefits to Pennsylvania. Although energy demand will grow along with greater adoption use of AI applications, industry efforts to improve grid technology, computing efficiency, and simulation tools could help grid operators cope.
What Happened
Electric utility Constellation Energy and software giant Microsoft have reached a deal to reopen a unit at Pennsylvania’s Three Mile Island nuclear power plant to provide electricity for Microsoft’s artificial intelligence data centers. Constellation will spend about $1.6 billion to restart the 835-megawatt reactor, which had been mothballed for economic reasons.
Significance/Outlook
Microsoft has agreed to a 20-year power purchase agreement for electricity from the plant’s Unit 1, left undamaged in the 1979 near-meltdown that destroyed the Unit 2 reactor. The proliferation of AI data centers like the ones being developed by Microsoft will continue to place greater demands on electric generation assets and power distribution grids. The agreement means the power for its centers will come from a source with few carbon emissions. A forecast by the electric industry research and development organization EPRI suggests that at the present rate of growth, AI data centers could consume as much as 9% of the total output of the U.S. power industry by 2030, double the current demand, making the development of additional renewable and other low-carbon energy sources crucial.
2
Algeria/Spain
Liquefied Natural Gas
What Happened
Algeria has increased its sales of liquified natural gas (LNG) to help preserve its European market share while a maintenance project has reduced the capacity of the Medgaz pipeline.
Significance/Outlook
Gas flow through the Medgaz pipeline connecting Algeria and Spain has dropped considerably since the repairs began. But by boosting LNG exports to Spain and Italy, the country has been able to keep an active presence on the European gas market. Algeria’s proximity to European markets allows it to use LNG to meet European demand with shorter transit times and fewer costs compared to other LNG exporters. This logistical advantage allows it to quickly adjust sales to respond to market demands in spite of restrictions imposed by projects such as the Medgaz pipeline maintenance.
3
Spain
Green Hydrogen
What Happened
Spain has increased its green hydrogen production capacity target, expressing confidence in a sector in which energy companies have cut expectations due to high prices and uncertain demand.
Significance/Outlook
The Spanish plan’s goals for renewable energy and energy efficiency make it an important road map for investment companies. Spain is trying to lead Europe in green hydrogen production by leveraging its abundant sunshine and wind resources to generate clean energy that can be used to manufacture hydrogen. Low-carbon, or green, hydrogen is needed to decarbonize Europe’s economy, but it’s more expensive than natural gas-derived blue hydrogen. Spain is committed to making the transition to renewable energy sources, and these ambitious targets reflect that commitment.
4
Sudan/South Sudan
Oil
Oil accounts for 90% of South Sudan’s government revenue. Resumption of exports will help stabilize its economy, which has suffered from depleted cash reserves and a nearly 50% devaluation of the South Sudanese pound. Restarting exports will also reduce the risk of internal unrest, potentially preventing a conflict similar to the one in Sudan.
What Happened
Oil-rich South Sudan is set to resume crude oil exports through Port Sudan after months of inactivity.
Significance/Outlook
South Sudan suspended oil exports in February 2024 amid the long-running conflict between the Sudanese army and the Rapid Support Forces. A shortage of diesel fuel used to thin the crude oil exported through the Petrodar pipeline caused it to rupture, causing extensive damage. Recognizing the economic losses caused by the halt, leaders from both governments agreed to take steps to repair the pipeline, the only means of exporting South Sudanese oil, and resume oil flows through Sudan. The resumption of oil exports is a crucial step allowing South Sudan to mitigate its economic crisis and ease rising regional political tensions.
5
U.S./China
Tech
The White House risks backlash from the U.S. automotive industry as the ban would derail supply chain agreements already in place even though this segment of the industry is still in the development stages. If the ban were to pass, it would increase the risk of retaliation by the Chinese, who could frame it as an escalation of trade tensions between the two countries.
What Happened
The Biden administration is considering banning the imports of vehicles from China with driverless or internet-connected capabilities because of the risk that the software could be used for espionage.
Significance/Outlook
The U.S. Department of Commerce’s Bureau of Industry and Security has proposed the regulations as concerns emerge that foreign state actors will use vehicle data to gather intelligence on U.S. drivers and infrastructure. The ban would affect vehicles that operate on public roadways but not agricultural vehicles, and it would take effect on installed software starting with model year 2027 and hardware in model year 2030. The proposal comes a week after the Department of Justice announced the disruption of a new Chinese hacker group, “Flax Typhoon,” which was accused of infiltrating various U.S. networks with the purpose of intelligence-gathering.
