This week, former President Donald Trump won the U.S. presidential election, while the Republican Party won a Senate majority. In Russia, North Korean troops were reported to have entered combat with Ukrainian forces in Kursk, and Ukraine expressed interest in a Qatari-mediated agreement on the exclusion of energy targets. In the Middle East, Israel continued its assault in Lebanon while an unconfirmed report indicated the U.S. has deployed F-15 jets to Jordan to defend Israel from retaliatory attacks. In the Indo-Pacific, South Korea was hit by cyberattacks, while North Korea launched several short-range missiles into the Sea of Japan, and the U.S. held long-range bomber drills with South Korean and Japanese forces.
Weekly Forecast Monitor: Nov. 8, 2024
The Geopolitical Hotspots Monitor examines the outlook for key geopolitical hotspots around the world.
1 Russia/Ukraine Conflict
Summary
The Russia/Ukraine conflict trended toward military escalation and diplomatic de-escalation scenarios as North Korean troops began fighting Ukrainian forces alongside Russian troops in Kursk and South Korea considered providing Ukraine with lethal aid. Ukraine reacted with optimism to President-elect Donald Trump’s victory, while Russia expressed caution. Ukraine expressed interest in working with Qatari mediators to establish a deal with Russia to exclude energy infrastructure from airstrike target lists.
Forecast indicators
Military escalation scenario
- U.S. and Ukrainian officials have confirmed that North Korean troops battled Ukrainian troops alongside their Russian counterparts in Russia’s Kursk region. North Korean casualties were reported, although no numbers have been disclosed.
- South Korean President Yoon Suk Yeol expressed openness to providing weapons to Ukraine. Yoon said the decision would depend on the depth of North Korean cooperation with Russia.
- Russian attacks continued to target cities across Ukraine, as Ukrainian defense officials reported that over 2,000 Iran-provided Shahed drones entered Ukraine during October.
Hybrid escalation scenario
- Western intelligence agencies uncovered a Russian intelligence plot to down commercial and passenger planes bound for the United States and Canada by placing incendiary devices in their cargo holds. Russian operatives succeeded in placing such devices on flights inside Europe in what is believed to have been a test run.
- Russia launched dozens of satellites, including two Iranian devices, into orbit. Russia’s space agency said the satellites are part of a program to monitor atmospheric conditions.
- During a visit to Kyiv, German Foreign Minister Annalena Baerbock said Germany will provide an additional $185 million to support Ukrainian energy infrastructure, which has been the repeated target of Russian bombardment.
Diplomatic de-escalation scenario
- Ukrainian President Volodymyr Zelenskyy congratulated Trump on his election victory and expressed hopes of working with his administration to achieve a “just peace” in Ukraine. Meanwhile, the Kremlin expressed caution, calling the U.S. a hostile state. Trump has repeatedly claimed that if he won the election, he could end the war in Ukraine prior to taking office.
- Andriy Yermak, the head of Office of the President of Ukraine, said his country would be willing to work through Qatari mediators to negotiate an agreement with Russia wherein both sides would refrain from targeting one another’s energy infrastructure.
2 Middle East
Summary
Conflict in the Middle East trended toward military escalation and diplomatic de-escalation scenarios as Israel continued military operations in Lebanon and announced an expansion of its ground campaign in northern Gaza. The United States deployed additional forces to protect Israel from potential Iranian attack. Israeli Prime Minister Benjamin Netanyahu reacted happily to Donald Trump’s election victory, while Iranian President Masoud Pezeshkian expressed indifference.
Forecast indicators
Military escalation scenario
- Israeli airstrikes killed dozens of Lebanese in the eastern city of Barja and across the western governorate of Baalbek-Hermel. Hezbollah conducted numerous rocket attacks against Israel, including a strike in central Israel that wounded 11.
- Israeli forces expanded their ground campaign to include the northern Gaza city of Beit Lahiya, which has been the focal point of clashes with Hamas in recent months. Israeli bombardment continued across Gaza, killing dozens of Palestinians. Most of the casualties resulted from airstrikes in Beit Lahiya.
- Israeli airstrikes and ground raids killed at least eight Palestinians in the West Bank cities of Qabatiya, Tammoun, and Jenin.
- The United States has sent F-15 aircraft to the Middle East to defend Israel and deter Iran from conducting retaliatory strikes, according to flight monitoring data. This follows the recent U.S. deployment of B-52 bombers to the region. The U.S. Department of Defense has not publicly confirmed any fighter jet deployment.
- Prime Minister Benjamin Netanyahu and Minister of Domestic Security Itamar Ben-Gvir expressed joy at Trump’s election victory. Iranian President Masoud Pezeshkian, meanwhile, said the result of U.S. elections are irrelevant to Iranian policies.
Hybrid escalation scenario
- Iran detained Reza Valizadeh, a dual U.S.-Iranian citizen, according to the U.S. Department of State. Valizadeh was believed to have been initially detained several weeks ago as tensions increased between the United States and Iran.
Diplomatic de-escalation scenario
- The United States and Saudi Arabia are in talks to sign a bilateral security deal that will not involve Israel. The potential deal falls short of the goals the White House held before the Oct. 7, 2023, attacks, which included a full defensive treaty between the United States and Saudi Arabia and the establishment of formal relations between Saudi Arabia and Israel.
3 U.S./China/Indo-Pacific
Summary
Tensions in the Indo-Pacific trended toward a hybrid escalation scenario. Leaders from Taiwan and China congratulated President-elect Donald Trump on his victory and vowed to work closely with him on matters of mutual interest. Cyberattacks took official South Korean military and judicial websites temporarily offline. The U.S. conducted long-range bomber drills with Japan and South Korea. The Philippines held large-scale military exercises in the South China Sea. North Korea fired several short-range ballistic missiles into the Sea of Japan.
Forecast indicators
Military escalation scenario
- A Chinese tech company, Guangxi Xinhang Shengjie Emergency Industrial Park Management Company, signed a deal with Russia’s Ufa State Aviation Technical University agreeing to import aviation and counter-drone technology to China from Russia.
- North Korean Foreign Minister Choe Son Hui met her Russian counterpart, Sergey Lavrov, in Moscow to reaffirm the countries’ bilateral relations.
- The U.S., Japan, and South Korea participated in a trilateral drill involving a long-range bomber flight.
- The Philippines engaged in the first of two weeks of military drills in the South China Sea, involving more than 3,000 personnel from its army, navy, and air force, with a scenario focused on recapturing an island.
- The Japanese Defense Ministry reported that North Korea fired several short-range ballistic missiles into the Sea of Japan. The missiles reportedly traveled over 400 kilometers at a height of around 100 kilometers. South Korea responded by launching a ballistic missile into the Yellow Sea.
- Taiwan took part in the U.S.-led “Northern Strike” military exercise in August, involving over 1,000 troops from the U.S. military and its allies.
- Taiwan’s Ministry of National Defense tracked 116 Chinese aircraft and 33 naval vessels around the island this week, with 84 aircraft crossing the Taiwan Strait median line.
Hybrid escalation scenario
- South Korean military and judicial system websites were targeted by cyberattacks that temporarily brought them down. While the source of the attack was not attributed, the country’s Cyber Operations Command noted that cyberattacks originating from North Korea had increased in recent years and said Russia might now facilitate them.
- Philippine President Ferdinand Marcos Jr. signed two laws enshrining into domestic law the country’s territorial demarcations in the South China Sea and its right to resources, drawing strong condemnation from Beijing, which summoned the Philippine ambassador to the foreign ministry.
- China sanctioned Skydio, a U.S. drone manufacturer, earlier in October after the U.S. made a proposal to sell exploding drones to Taiwan.
- Zhang Qizai, deputy director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences, has warned Chinese policymakers they should learn from the Russian response to U.S. sanctions against it and take preemptive steps to ensure self-sufficiency in grain and energy.
- Taiwanese Economy Minister Kuo Jyh-huei said the government would help Taiwanese companies relocate their production bases out of China in light of Trump’s threat to impose 60% tariffs against imports from China during his presidential campaign.
- Canada sent a cybersecurity attaché to its representative office in Taiwan to advise and cooperate on countering cyber threats from China.
- China’s exports grew at an accelerated rate in October as the threat of a trade war with the EU and possible tariffs by a Trump White House weighed on Beijing’s policymakers.
- The U.S. admonished China and Russia at the U.N. Security Council, accusing them of protecting North Korea despite its violations of U.N. sanctions following Pyongyang’s announcement that it would accelerate development of its nuclear weapons capabilities.
Diplomatic de-escalation scenario
- The China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal Byproducts signed a memorandum of understanding with the Australian avocado trade association, advancing the chances of Australian avocados being sold on the Chinese market in an example of warming trade ties following years of strained bilateral relations.
- China has blamed an “unspecified obstruction” for the incursion of a Chinese military aircraft into Japanese airspace in August. The statement comes ahead of the upcoming meeting between Chinese President Xi Jinping and Japanese Prime Minister Shigeru Ishiba.
- Chinese Premier Li Qiang announced at the annual China International Import Expo that China would its free trade zones and would be open to explore further investment opportunities with more countries in order to enhance the supply chain efficiency in key sectors including tech and electric vehicles.
- After a meeting in Beijing with , the leader of Myanmar’s ruling junta, Li said China supports that country’s political reconciliation plans and its promised elections next year.
4 Other Hotspots
United States
- Former President Donald Trump won the 2024 presidential election with majorities in both the Electoral College and the popular vote. In a speech conceding victory, Vice President Kamala Harris, the unsuccessful Democratic nominee, congratulated Trump The Republican Party secured a majority of U.S. Senate seats. Results are still being tabulated in several races that will determine control of the House of Representatives.
- Significance: Trump’s victory marks what is likely to be a strong overhaul of many aspects of U.S. policy. Among his campaign promises were efforts to limit access to asylum for migrants and mass deportations of people found to have entered the country illegally. He promoted additional U.S. fossil fuel production through increased drilling and pipeline construction. He also touted tax cuts and limits on federal regulation while increasing tariffs on imported goods. He will likely overhaul the federal government, ensuring employees adhere to his views; he has stated he would “punish” dissenting voices.
Venezuela
- The U.S. Department of Justice has alleged that a Turkish national attempted to circumvent U.S. sanctions against Venezuela by helping state oil company Petróleos de Venezuela S.A. illegally transport oil through a complex network that concealed the identities of tankers.
- During a meeting with Venezuela’s transportation minister, Iranian Minister of Communications and Information Technology Seyyed Sattar Hashemi offered to share AI technology and expertise with Venezuela.
- Significance: The introduction of AI in Venezuela could bring significant changes to the economy and workforce. While AI may boost the job market, it could also be used to monitor citizens’ activities. Additionally, the disruption of the illicit oil operation, ongoing since 2020, may deal a substantial economic blow to PDVSA, further impacting an already struggling economy.
South Africa
- Trump’s decisive victory in the U.S. presidential election is alarming South African businesses and exporters who must now confront an uncertain economic relationship with the U.S. Trump’s historical disdain for The African Growth and Opportunity Act (AGOA) and the 2015 AGOA amendment that enables a party to restrict, withdraw, or suspend AGOA benefits for an African member could threaten South African access to U.S. markets.
- The threat of being removed from AGOA comes in the wake of already fragile U.S.-South African relations. The future Trump administration will likely make this relationship more tense, considering that Trump’s isolationism, his focus on countering China, and a strong pro-Israel stance could see the U.S. take a more punitive stance toward Pretoria, specifically regarding South Africa’s relationship with China and its accusations of Israeli-perpetrated genocide in Gaza.
- Significance: Trump’s electoral victory and the uncertainty surrounding the AGOA points to signs of economic destabilization. Pretoria will therefore have to delicately navigate these dynamics to ensure AGOA benefits continue as the U.S. presidential administration transitions.
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
1
U.S./China/Southeast Asia
Solar Power
What Happened
In response to recently expanded U.S. trade tariffs targeting solar power equipment production by Chinese-owned companies in Vietnam, Thailand, Malaysia, and Cambodia, production is shifting to plants in Indonesia and Laos, countries not affected by the tariffs, Reuters reported. Meanwhile, growing concern among U.S. lawmakers over granting U.S. incentives to Chinese companies under the Inflation Reduction Act has prompted manufacturer Trina Solar to sell a solar equipment factory it had built in Texas to U.S.-based Freyr Battery. The Trina Solar plant, which had started production Nov. 1, could have received up to $1.8 billion of taxpayer money under the Inflation Reduction Act, which provides incentives for investment in technology manufacturing infrastructure.
Significance/Outlook
U.S. solar panel producers have pushed for government intervention against less expensive imports from Chinese manufacturers, saying that subsidies from Beijing and other Asian export destinations give companies there an unfair advantage. However, the shift in production from countries targeted by U.S. tariffs to other locales demonstrates the difficulty in crafting trade policy to try to contain Chinese manufacturing. While the Inflation Reduction Act was designed to revitalize U.S. manufacturing, especially in the high tech and renewable energy sectors, there is no provision in the law barring Chinese firms from benefitting from its incentives. But political pressure, especially considering the anti-China trade stance of the next U.S. presidential administration, could give foreign manufacturers second thoughts about taking advantage of the law’s tax breaks.
2
OPEC
Oil Prices
This development is seen as a low-level opportunity for OPEC countries and oil-producing nations in general, as it provides a chance to stabilize prices against decreasing global demand and support revenue stability. On the other hand, it poses a low-level risk for non-OPEC oil producers, which lack the same power to drive prices, potentially discouraging investments in the oil and gas sector.
What Happened
OPEC has postponed a decision to raise its voluntary oil production cap of 2.2 million barrels per day until the end of December 2024.
Significance/Outlook
This one-month delay had an immediate impact on the oil market, contributing to a price increase of 3% and sending the benchmark price of West Texas Intermediate crude above $70. OPEC views this decision as a move to stabilize oil prices amid concerns about declining global demand and economic uncertainties. However, Claudio Descalzi, the CEO of Italian energy major Eni, such decisions contribute to price volatility and hamper investments in the oil and gas sectors. OPEC’s typical strategy is to adjust production based on market conditions, increasing or decreasing output as prices dictate. Descalzi said such inconsistencies can significantly destabilize the energy market. This underscores OPEC’s role as a swing producer, strongly influencing global oil markets and demonstrating its ability to drive immediate price shifts.
3
Sweden
Wind Power
Sweden's willingness to halt permits for fossil-free clean energy projects to enhance national defense will slow its progress toward goals of reaching net-zero carbon emissions by 2045 and achieving its renewable energy ambitions. By 2040, Sweden intends to generate all its electricity from renewable sources.
What Happened
The government of Sweden, which became a full NATO member in March, rejected the issuance of licenses to build and operate 13 offshore wind farms planned for the Baltic Sea over national security concerns.
Significance/Outlook
The government cited interference with sensors and radar by the offshore wind turbines, saying it would impact Sweden’s defense capabilities. Wind turbines’ enormous towers and spinning blades reflect electromagnetic radiation, interfering with radar systems. This interference can hinder the tracking of a target, like a submarine or a cruise missile, and make detection more difficult. This decision is significant for the sake of national security, but it will affect Sweden’s aspirations to achieve its decarbonization goals through the rapid expansion of renewable energy sources.
4
Russia/Ukraine/Qatar
Energy
What Happened
Ukrainian presidential adviser Andriy Yermak said his country is open to negotiating an agreement with Russia mediated by Qatar or another country that would forbid attacks on energy infrastructure of both countries.
Significance/Outlook
Since Russia’s invasion of Ukraine in 2022, continuous and progressively more serious missile and drone strikes have targeted Ukraine’s energy infrastructure. Damage to power plants and electric grid infrastructure, including transmission and distribution facilities have created energy problems, increasing prices for consumers and decreasing the availability of essential services like electricity, clean water, and heating. Ukraine has countered with its own attacks on Russian energy infrastructure, including one on Sept. 1 that hit power plants and oil refineries near Moscow.
5
Japan
Nuclear Energy
While the malfunction could be viewed as a setback to Japan’s nuclear restart efforts, it is only a temporary issue. In addition, this plant successfully maintained its essential cooling systems even after it suffered damage from the same tsunami that knocked out Fukushima’s cooling systems in 2011, indicating its resilience under extreme conditions.
What Happened
An equipment malfunction prompted the operators of Japan’s Onagawa nuclear power plant to shut down its No. 2 reactor on Nov. 4, just five days after it had been restarted.
Significance/Outlook
The malfunction occurred in a measuring device designed to enhance the accuracy of neutron data, which stopped working during testing. Although there was no risk of a radiation leak, plant operator Tohoku Electric halted operations until further notice. This was the 13th reactor to restart since the Fukushima nuclear power plant disaster in 2011, reflecting the cautious approach taken by the Japanese government to resume nuclear power production. While Japan generated approximately 30% of its electricity from nuclear power before the Fukushima disaster, it now accounts for less than 10%, underscoring the challenges Japan faces in stabilizing its nuclear energy sector. In the meantime, the country has introduced more stringent safety regulations for the nuclear power sector.
