The Red Folder

Archived from February 19, 2024

Key stories for the week, brought to you by the distinguished newsman Sasha Morel.

Reading for the sake of reading sucks. Telling yourself to read to win a round is nice but ineffective. This condensed news brief helps you understand current domestic and international issues, analyze the news, and gives you opportunities to read more.

International Stories

3 key international stories for the week:

1) Is Britain facing a Rishi-Recession? Sasha Morel

In the latter half of 2023, the British economy experienced a recession, creating a challenging environment leading up to the anticipated election for Prime Minister Rishi Sunak, who had committed to stimulating growth. Official data revealed a 0.3% contraction in Gross Domestic Product (GDP) during the three months to December, following a 0.1% shrinkage between July and September. This fourth-quarter decline surpassed all expectations from economists in a Reuters poll, which had predicted a 0.1% decrease.

As a consequence of the economic downturn, the British pound weakened against the dollar and the euro. Investors increased their wagers on the Bank of England (BoE) implementing interest rate cuts in the coming year, while businesses urged the government for additional support, with a budget plan scheduled for March 6.

This economic contraction places Britain alongside Japan among the Group of Seven advanced economies in a recession, albeit anticipated to be short-lived and relatively shallow compared to historical standards. The country's current economic level is only 1% higher than late 2019, pre-dating the COVID-19 pandemic, with Germany being the sole G7 nation with a worse performance.

Sunak's commitment to revive economic growth was a key promise to voters, yet recent polls indicate a shift in trust regarding economic matters, with Labour now viewed as more reliable. Analysts predict that British households are on track to experience their first decline in living standards between consecutive national elections since the Second World War.

Deputy Chief UK Economist at Capital Economics, Ruth Gregory, highlighted the political significance of the GDP figures, particularly as voters were set to elect lawmakers in two constituencies. Finance Minister Jeremy Hunt expressed optimism about the economy turning a corner and emphasized sticking to the plan of cutting taxes to strengthen the economy. However, the Labour Party rejected these claims, stating that the prime minister could no longer assert the effectiveness of his plan.

Media reports suggested that Hunt was exploring reductions in public spending to finance pre-election tax cuts in the budget, constrained by tight finances. The Office for National Statistics (ONS) reported a 0.1% growth in the economy throughout 2023 compared to the previous year, with the BoE projecting a slight uptick in output for 2024, reaching only 0.25% growth.

The British economy has faced stagnation for nearly two years, initially triggered by the severe contraction during the early months of 2020 due to the COVID-19 pandemic. Previous economic challenges, such as the global financial crisis, resulted in a recession lasting just over a year from the second quarter of 2008 to the second quarter of 2009.

Speculation about potential interest rate cuts arose following lower-than-expected inflation in January, raising the possibility of a BoE rate cut as early as June. Finance Minister Hunt expressed hope for a reduction in borrowing costs by the early summer, aligning with investors who were pricing a 68% chance of a first BoE rate cut at its June meeting. BoE Governor Andrew Bailey remained cautious, citing the need for more evidence that inflation pressures were subsiding.

Economic data revealed a 0.1% decline in monthly output in December, with manufacturing, construction, and wholesale sectors being the primary contributors to the GDP decrease in the fourth quarter. Notably, GDP per person has not seen growth since early 2022, marking the longest unbroken run since records began in 1955.

The potential impacts of Britain's recent economic downturn are manifold and extend beyond the immediate fiscal challenges. As the nation grapples with a recession, there is a heightened risk of increased unemployment, strained household finances, and a potential slowdown in consumer spending. Businesses may face heightened difficulties, with reduced demand and tighter profit margins. The government, already contending with economic uncertainties, may find its ability to implement robust policies and initiatives constrained. Additionally, the international standing of the British economy could be affected, potentially impacting trade relations and foreign investments. The outcome of these challenges will likely shape the trajectory of the nation's recovery and influence the policy decisions of the elected leaders in the upcoming election. It underscores the importance of agile and strategic economic planning to navigate the complexities and foster a resilient and sustainable recovery.

Read more here:

2) Mysterious Russian Space Weapon Raises Global Concerns Sasha Morel

On the 14th of February, Washington was awakened with reports of a cryptic Russian space apparatus, prompting Mike Turner, head of the House intelligence committee, to push for the declassification of intelligence regarding a "grave national-security concern." Media outlets speculated that the threat was linked to an undeveloped Russian space-centric nuclear system that could pose a risk to American and allied satellites.

Initial reports on the matter have been conflicting, with some sources referring to a nuclear-propelled spacecraft and others hinting at a nuclear-armed variant. Broadly, there are three potential scenarios: a terrestrial "pop-up" nuclear weapon designed to obliterate satellites, a nuclear weapon stationed in orbit, or a nuclear-powered satellite not intended as an explosive device but utilizing nuclear energy to power other mechanisms.

If Russia were to deploy a nuclear weapon in full orbit, as opposed to a "fractional" orbit, it would violate the Outer Space Treaty of 1967. Additionally, nuclear detonations in space are prohibited by the 1963 Partial Test Ban Treaty, to which Russia is a signatory. Beyond the legal implications, such an orbital explosion could be highly destructive and indiscriminate, causing damage to satellites through electromagnetic pulses.

The consequences of a nuclear detonation in space differ significantly from those on Earth. In the vacuum of space, radiation is the primary factor, and an orbital explosion could potentially damage electronics on satellites across a broad expanse of the sky. Given the current prevalence of satellites in low Earth orbit (LEO), with around 8,300 active satellites, the impact would extend beyond American satellites to affect those of Russia, China, and other countries, potentially impacting the International Space Station (ISS) as well.

The motives behind Russia's potential deployment of a nuclear weapon into orbit remain uncertain. One theory posits that Russia aims to reach geosynchronous orbit (GEO), approximately 36,000km from Earth, where many valuable American surveillance and military communication satellites are located. Existing nuclear missiles lack the capability to reach such altitudes.

Another theory suggests that Russia might deploy a nuclear-powered satellite with electronic warfare (EW) capability. Electronic attacks involve jamming or spoofing signals sent or received by target satellites, and deploying such capabilities from space could enable more focused and persistent attacks, particularly if the satellite can be positioned close to the target.

Historically, Russia has explored such systems, with evidence suggesting the development of high-powered space-based EW platforms. Nuclear reactors have been considered advantageous for satellites, providing ample power to support more potent electronic warfare capabilities. Placing such satellites in highly elliptical or geosynchronous orbits could enable uninterrupted suppression of electronic systems in large areas.

James Acton, an expert at the Carnegie Endowment, suggests that Russia's interest in electronic warfare capabilities may be driven by the growing prevalence of "proliferated" constellations like SpaceX's Starlink. These constellations, comprising thousands of satellites, pose a challenge for conventional physical disruption but could be vulnerable to wide-area electronic attacks.

In summary, the nature and purpose of the reported Russian space apparatus remain unclear, with various theories circulating, including the deployment of a ground-based nuclear weapon or a nuclear-powered satellite with electronic warfare capabilities. The potential consequences, both legally and in terms of global satellite infrastructure, underscore the significance of closely monitoring developments in this space.

Read more here:

3) Prabowo wins Indonesian Election. What Next? Sasha Morel

After patiently biding his time since 1998, following the fall of Indonesia's longtime ruler, Suharto, Prabowo Subianto has finally secured victory in the country's presidential election. In the wake of Suharto's regime, Prabowo, who initially attempted to seize power in 1998, lost in presidential bids in 2014 and 2019, both times claiming electoral fraud without evidence. However, as polling closed on February 14th, reliable polls indicated that Prabowo had won nearly 60% of the vote in the first round, making him the next leader of Indonesia.

Prabowo, a controversial former general with a contentious history, has undergone a rebranding, presenting himself as a genial grandfather. Despite Indonesia's flawed democracy, cherished by many in a region dominated by autocrats, this election has been labeled the least democratic since the reformasi era that followed Suharto's fall, according to prominent Indonesian academics, activists, and journalists.

The responsibility for this perceived decline in democracy is placed on Joko Widodo (Jokowi), who, despite his continued popularity, supported Prabowo. Jokowi has been accused of eroding democratic institutions, including the once-independent anti-corruption commission, and facing allegations of meddling in the election. Other candidates, Anies Baswedan and Ganjar Pranowo, accused state agencies of canceling their rallies and intimidating Jokowi's critics during the campaign.

The reconciliation between Jokowi and Prabowo in 2019, with Prabowo becoming defense minister, and the candidacy of Jokowi's eldest son, Gibran Rakabuming, as Prabowo's vice-presidential candidate, have raised eyebrows. The constitutional court, led by Jokowi's brother-in-law, effectively exempted Gibran, aged 36, from a rule barring anyone under 40 from running for president or vice-president.

Prabowo's election victory was celebrated at a Jakarta sports stadium, with cheers for Jokowi and calls for reconciliation with his former wife, Titiek Suharto. Prabowo ran on a platform of continuity, promising to build on Jokowi's policies, including relocating the capital to Borneo and a nickel-centric industrial policy. Supporters describe Prabowo as "continuity with improvement."

Despite concerns about a potential crackdown on civil society and the press under Prabowo, worries about Indonesia slipping into full autocracy might be overstated, according to Marcus Mietzner of the Australian National University. He suggests that Indonesian democracy is weakened enough that Prabowo doesn't need a complete overhaul, given his recent electoral success. Nevertheless, concerns persist about the future of Indonesia's democracy under Prabowo's leadership, as he is expected to continue the trend of economic growth coupled with a weakening of democratic institutions set by Jokowi.