US Vetoes Gaza Ceasefire Resolution

On February 20, the United States vetoed a UN Security Council resolution on a ceasefire in Gaza, arguing that it would jeopardize hostage negotiations. Thirteen members of the council voted for the resolution with the UK abstaining. The US has drafted a competing resolution to call for a pause in the violence (though it is unclear if this will come to a vote), and this signals that the US could soon demand Israel end the war before their planned attack on Rafah begins next month during Ramadan. However, Israel has stated that it wants to put pressure on Hamas to release the hostages and demonstrate they can and will eliminate the terrorist organization at any cost. As neither Israel nor Hamas are willing to concede on the issues, a ceasefire remains extremely unlikely, and the US will have to decide how much support they will continue to give. Legislation in Congress (both Senate and House bills) still offer military aid to Israel. On the other hand, Israel is suffering economically because of the war with GDP shrinking 19% in the fourth quarter.

Israel is highly likely to continue with the war for at least another 6-8 weeks as they prepare for the Rafah offensive should Hamas not release the hostages. Rafah is important as approximately 1.5 million internally displaced Palestinians are in the city, and there are expectations of high loss of life with refugees fleeing into Egypt. Israel has claimed it is working with the US and Egypt to minimize civilian casualties. Currently, Egypt is planning for a worst-case scenario in which a large number of refugees attempt to enter the country, and they are building a wall around an area they expect refugees to come. If Israel enters Rafah, then regional powers are expected to respond negatively, and it is highly likely protests will take place in Egypt and other locations.

Law Enforcement Dismantles LockBit

The FBI, Europol, and the UK’s National Crime Agency have effectively disrupted the notorious LockBit ransomware gang, arresting two members in Poland and Ukraine. LockBit is the world’s most prolific ransomware gang, and the international partners were able to seize 34 servers and freeze more than 200 crypto addresses. “Operation Cronos” was a successful coordinated effort that has “taken control of the technical infrastructure that allows all elements of the LockBit service to operate, as well as their leak site on the dark web, on which they previously hosted the data stolen from victims in ransomware attacks.” This operation was critically important for cybersecurity for several reasons. First, this will significantly disrupt LockBit’s operations and will make it harder for the criminal enterprise to move forward. Second, it is a positive indicator of law enforcement’s ability to dismantle ransomware gangs that harm corporations and individuals. Third, this will cause a major disruption to the general ransomware ecosystem. LockBit had accounted for approximately 25% of all ransomware attacks, and it is highly likely that ransomware gangs will have to alter their TTPs. In addition, the seizure of decryption keys on LockBit users will help aid victims globally.

Germany Officially in a Recession

According to the Bundesbank’s monthly report, Germany is now likely in a recession as external demand is weak and domestic investments have declined due to high borrowing costs. Germany has experienced its fourth straight quarter of zero or negative growth, and the bank’s report described it as a “technical recession.” Russia’s invasion of Ukraine has been difficult on Germany because of energy costs, which have negatively impacted the industry-heavy economy of the country. This will harm the entire eurozone as Germany is one of the most important economies in Europe, and the continent is likely to have reduced economic development over the coming year. Furthermore, this likely demonstrates the difficulties from Germany’s economic model, especially its corporatist approach to markets and opposition to domestic energy production.

Indonesia Passes Tech Regulations

Indonesian President Joko Widodo has signed into law new regulations requiring digital platforms to pay media outlets that provide them with content. This is like regulations imposed in other places, which are meant to control how technology companies deal with the media industry. Companies such as Meta and Google will be impacted, but so will some local aggregators. While the intent of the legislation is “fair cooperation,” it highlights the continued risks to technology companies that are seeing significantly more regulations globally. Technology companies are highly likely to see such regulations in more locations, especially in major economies in Europe and Asia.

China Cuts Benchmark Mortgage Rates

China has decided to reduce benchmark mortgage rates by 25-basis points (4.20% to 3.95%), the largest reduction to the five-year loan prime rate since it was introduced in 2019. The property market in China is in steep decline and accounts for at least 25% of the country’s GDP. Such a small reduction is unlikely to have a major short-term impact because most new loans are based on the one-year loan prime rate, but it is a signal that the CCP is trying to mitigate the likely collapse of the property market. This cut is taking place when foreign investment has increased the least amount in 30 years, a major negative indicator for confidence in the Chinese market. In addition, absolute investment declined in the third quarter of 2023, which is the first time that happened in 25 years.

Red Sea and Indian Ocean Insecurity

The Red Sea and Indian Ocean are facing major insecurity as the US and regional powers make geopolitical moves against regional adversaries. On February 20, the Houthis downed a US Reaper drone after the US had bombed Houthi positions a few days prior. The Houthis have also severely damaged a Belize-flagged British cargo ship. Although the latest reports indicate the ship is being towed to Djibouti there remains a credible risk it will sink. If it does, it will be the first ship sunk by the Houthis since October 7 and the United States will have to decide if they will escalate the conflict with the Houthis even though Iran has told their proxy to be careful of war. This is occurring while India is attempting to make Great Nicobar in the Andaman Sea into a naval hub and Australia is seeking to double its surface fleet. Analysts should see these issues as interconnected because regional powers are trying to improve security in the entire region while preventing adversaries like Iran and China (and their proxies) from gaining maritime control or continuing to threaten ships.

Migration Top Concern in Europe

Centrist and left-wing governments are dealing with the political problem of immigration as irregular migration is increasing from Africa and the Middle East. Poland has stated they will increase its border security, but Italy’s courts have stated that migrants departing Libya cannot be returned. However, EU asylum laws will determine how most governments can respond, and a survey at the Munich Security Conference indicates that migration is the top political concern for voters across the continent. This is likely to increase support for conservative and right-wing governments throughout Europe, and there are already indicators that the right is gaining ground in France, Portugal, and Spain.

Threats of Political Violence Increase in the U.S.

There are new indicators that political extremism and violence are increasing in the United States, which raising risks for the remainder of the presidential election in 2024. First, the number of hoax bomb threats following posts by the popular right-wing account Libs of TikTok has spread significantly. There have been a number of bomb threats made against schools when Libs of TikTok post about their teaching critical race theory or approach to LGBTQ issues. Second, new data from the US Marshall Services shows that threats against federal judges has more than doubled since 2021. There are increased risks from political violence in United States during the election, especially due to the highly polarized nature of the electorate. Corporations that get connected to political causes can become potential targets of such violence.

Chatham House Report on American Civil War

Chatham House has issued a report on the increased likelihood of a civil war in the United States, stating that the US is “now more divided along ideological and political lines than at any time since the 1850s” (right before the American Civil War). Their report focuses on the major political divisions in the US along social issues (gender, voting, immigration), and they note that these divisions seem to go along the same regional/state lines as the Civil War from 160 years ago. While the case the report makes is overstated, it is an important indicator of how Europeans see the United States presently and the fears of polarization in the country, especially around this year’s presidential election. Such concerns could lead Europe to prioritize protecting their own interests and turn away from the United States if they believe they cannot rely on America as a partner.