Monday, August 7, 2023

“Fanaticism consists of redoubling your effort when you have forgotten your aim.” – George Santayana

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IN THIS NEWSLETTER

• War escalation

• Power shifts

• Internet censorship

• Crypto in Turkey

• Inflation is coming back

WHAT I’M WATCHING

War escalation

Less than two weeks after Russia and Ukraine said that all ships approaching each other’s ports would be assumed to be carrying military cargoes (and therefore possibly subject to attack), Ukraine has attacked a warship based in Novorissiysk. What’s more, Ukraine has declared six key Russian ports on the Black Sea as a “war risk area”, suggesting further attacks are likely.

Why it matters:

Novorissiysk is one of the largest ports in Europe, and a major node in the export of Russian oil and grain. The attack and temporary closure of the port, and the threat of further disruption, is not only an economic blow to Russia – it also implies supply pressure on oil and grain, arguably two of the global economy’s most significant commodities.

Beyond the potential impact on inflation and human misery, the escalation of the war adds to market uncertainty. Yesterday, Ukraine damaged two bridges in Crimea that connect the region with mainland Ukraine. Russia has often repeated that it would view an attack on its territory as motive for the use of “all weapons available”.

Power shifts

Over the weekend, Saudi Arabia hosted talks in Jeddah aimed at ending the war in Ukraine. Over 40 countries attended, including China.