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Tensions flare between North and South Korea

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South Korea is fed up with North Korea’s garbage—literally. Last week, North Korea sent around 3,500 balloons full of manure, scrap paper, and cigarette butts over the border into South Korea, in response to South Korean activist groups sending balloons with propaganda leaflets and other contraband to their isolated neighbors to the north.

And even though no one was hurt by the North Korean deliveries—and Pyongyang promised to pause the mud-slinging for now—the damage had been done. The relative calm on the Korean Peninsula was officially trashed.

On Tuesday, Seoul suspended a six-year-old military agreement with Pyongyang that aimed to decrease tensions between the two countries by requiring both sides to stop holding military drills or carrying out psychological warfare activities in border areas. It’s a move that has some officials and experts worried that hostility on the Korean Peninsula—already on the rise after North Korea carried out an underwater nuclear test in January—could blow through the roof.

Tit-for-tat. The scrapped 2018 deal dated back to former South Korean President Moon Jae-in’s time in office, where he sought direct rapprochement with the north in three successive meetings with North Korean dictator Kim Jong Un. Both sides agreed to stop blaring propaganda messages across the border at one another and to halt live-fire exercises within the 400-square-mile demilitarized zone (DMZ) along the 38th parallel that roughly splits the two countries.

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But even before Seoul killed the deal, relations on the Korean Peninsula were already deteriorating. North Korea’s failed launch of a military spy satellite in late May prompted South Korea to conduct air drills with 20 fighter jets—including F-35s, F-16s, and F-15s—maneuvering near the no-fly zone along the DMZ. And that’s when North Korea started sending trash balloons over the border.

“We cannot help being enraged by such intolerable saber-rattling, a blatant violation of our national sovereignty,” Kim said. He called South Korea a “gangsters’ regime.” And he punctuated his comments by firing 18 short-range ballistic missiles in a military drill.

Now, the Americans are involved. On Wednesday, the United States sent a long-range B-1 bomber over the Korean Peninsula in joint drills with Seoul and dropped precision-guided bombs. It was the first time that had happened in seven years. It last occurred during the war of words between former U.S. President Donald Trump and Kim that lasted for most of 2017.

Unwelcome distraction. For the last three years, the Biden administration has said that the U.S. will meet with North Korea anytime, anywhere, and without preconditions—a message that Pyongyang has pointedly ignored, even as Biden himself publicly repeated the pledge during Japanese Prime Minister Fumio Kishida’s visit to Washington in April.

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But the flare-up in tensions comes at a time when the United States is trying to get South Korea to focus outside of the Korean Peninsula and repair relations with Japan to deal with the threat of China’s military rise.

Historical animosity stemming from Japan’s World War II-era occupation of Korea, including the military sexual enslavement of thousands of Korean women, had undermined the prospect of a diplomatic thaw for most of the past eight decades. But Seoul and Tokyo had a “kumbaya” moment at a Camp David summit with Biden, Kishida, and South Korean President Yoon Suk-yeol in August 2023. Earlier this week, all three countries agreed to hold joint military exercises, and Japan and South Korea agreed to re-normalize defense ties in a significant step toward overcoming those historical issues.

Now, South Korea’s military assets—and the political bandwidth to keep an eye on China—are once again being diverted to deal with North Korea’s threats.

Biden has nominated Julie Smith to serve as the undersecretary of state for political affairs, the State Department’s fourth-ranking job. The role has been vacant since Victoria Nuland retired in March. Smith will stay on in her current job as U.S. ambassador to NATO while she goes through the confirmation process.

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Biden has also tapped Kin Moy to be U.S. ambassador to Vietnam and James Story to be U.S. ambassador to Mozambique. Both are career foreign service officers.

Kelly Magsamen, the chief of staff to U.S. Secretary of Defense Lloyd Austin, is set to leave her job at the end of the month after three and a half years.

House Speaker Mike Johnson has appointed Reps. Scott Perry of Pennsylvania and Ronny Jackson of Texas to serve on the House Intelligence Committee, putting two close Trump allies on the powerful congressional panel charged with overseeing U.S. spy agencies.

Johnson has also tapped Republican U.S. Rep. Ben Cline of Virginia to serve on the China select committee.

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Beyond the Russian border. The Biden administration is now allowing Kyiv to hit targets inside Russia close to the Ukraine border with U.S. arms, and Ukraine hasn’t wasted any time since it got the green light. By Wednesday, Ukraine had already struck inside Russia with U.S. weapons, congressional aides and NATO officials told us, as Russia ramps up attacks on the Ukrainian city of Kharkiv near the Russian border. Other European countries, including the United Kingdom, France, and Germany, have given Ukraine similar approvals.

Some officials and congressional aides we’ve spoken to (all spoke on condition of anonymity to discuss sensitive matters) concede there’s a chance this could further escalate tensions between Russia and NATO, particularly as Russian President Vladimir Putin floats more nuclear threats. Others believe the policy is necessary for Ukraine to defend itself and are frustrated the Biden administration has taken so long to approve the measure, believing the White House is leaning too far into micromanaging how Ukraine uses U.S. weapons systems.

We just want to talk. The Chinese People’s Liberation Army (PLA) has been aggressively recruiting former fighter pilots from NATO countries to train members of its air force and naval aviators, according to a bulletin issued Wednesday by the Five Eyes intelligence alliance composed of the United States, United Kingdom, Canada, Australia, and New Zealand.

“The PLA wants the skills and expertise of these individuals to make its own military air operations more capable while gaining insight into Western air tactics, techniques, and procedures,” the notice said. Front companies around the world have offered potential recruits “exorbitant salaries,” Michael C. Casey, the director of the U.S. National Counterintelligence and Security Center, said in a statement.

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“Somalia on steroids.” The U.S. special envoy for Sudan told Foreign Policy that the East African country’s ongoing civil war could devolve into a failed state, warning that it could become “Somalia on steroids,” as Robbie reported this week.

Sudan’s civil war, one of the world’s deadliest conflicts, has killed around 150,000 people by some estimates and been the scene of widespread atrocities including ethnic cleansing and potentially genocide. It has significant geopolitical implications as well: Russia is eyeing establishing a naval refueling station in Sudan on the strategically important Red Sea coast in exchange for supplying the Sudanese Armed Forces with more weapons.

Toxic workplace. U.S. military personnel responsible for maintaining America’s nuclear weapons arsenal were exposed to dangerous toxins and chemicals without proper safety equipment or support from the Air Force, according to a new investigation from Military.com. “Many believe their jobs repairing intercontinental ballistic missiles contributed to prolonged illnesses and cancer diagnoses,” the report found.

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Economy

UK inflation rises further ahead of Bank of England rates decision

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UK inflation climbed to 2.6% in November, up from 2.3% in October, according to the Office for National Statistics (ONS).

The rise matches market expectations and comes as the Bank of England prepares for its upcoming decision on interest rates later this week.

Core inflation, which excludes volatile items such as food and energy, also increased to 3.5% from 3.3% in October. However, this was slightly below the anticipated figure of 3.6%. Services inflation, closely watched by the Bank of England for signs of domestic price pressures, remained steady at 5%, slightly below market expectations of 5.1%.

Earlier this year, falling inflation allowed the Bank of England’s Monetary Policy Committee (MPC) to lower interest rates in August and November. The headline rate dropped to 1.7% in September but has since been pushed higher by rising energy costs and persistent services inflation.

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Despite the recent uptick, the Bank of England is widely expected to keep interest rates on hold at its meeting this week. Markets remain divided on whether a rate cut will come at the February meeting.

Michael Brown, senior research strategist at Pepperstone, highlighted the challenges ahead. “While risks to this base case are tilted towards a more dovish outcome, given increasing signs of overall economic momentum stalling, policymakers will be rapidly seeking convincing signs of disinflationary progress being made, as the economic cocktail facing UK Plc. increasingly becomes a stagflationary one,” he said.

The inflation figures follow Tuesday’s data showing stronger-than-expected wage growth. Average earnings, including bonuses, rose by 5.2%, exceeding the 4.6% forecast and October’s figure of 4.4%.

Chancellor to the Exchequer Rachel Reeves acknowledged the ongoing struggles faced by households. “I know families are still struggling with the cost of living and today’s figures are a reminder that for too long the economy has not worked for working people,” she said.

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Reeves outlined recent measures aimed at supporting workers, including no increases to national insurance, income tax, or VAT, as well as boosting the national living wage by £1,400 and freezing fuel duty. “Since we arrived, real wages have grown at their fastest in three years. That’s an extra £20 a week after inflation. But I know there is more to do. I want working people to be better off, which is what our Plan for Change will deliver,” she added.

Inflation is expected to rise further in the coming year as the UK continues to take a more gradual approach to easing monetary policy compared to other developed central banks.

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Germany’s Scholz loses a confidence vote, setting up an early election in February

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Chancellor Olaf Scholz lost a confidence vote in the German parliament on Monday, putting the European Union’s most populous member and biggest economy on course to hold an early election in February.

Scholz won the support of 207 lawmakers in the 733-seat lower house, or Bundestag, while 394 voted against him and 116 abstained. That left him far short of the majority of 367 needed to win.

Scholz leads a minority government after his unpopular and notoriously rancorous three-party coalition collapsed on Nov. 6 when he fired his finance minister in a dispute over how to revitalize Germany’s stagnant economy. Leaders of several major parties then agreed that a parliamentary election should be held on Feb. 23, seven months earlier than originally planned.

The confidence vote was needed because post-World War II Germany’s constitution doesn’t allow the Bundestag to dissolve itself. Now President Frank-Walter Steinmeier has to decide whether to dissolve parliament and call an election.

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Steinmeier has 21 days to make that decision — and, because of the planned timing of the election, is expected to do so after Christmas. Once parliament is dissolved, the election must be held within 60 days.

In practice, the campaign is already well underway, and Monday’s three-hour debate reflected that.

What did the contenders say?

Scholz, a center-left Social Democrat, told lawmakers that the election will determine whether “we, as a strong country, dare to invest strongly in our future; do we have confidence in ourselves and our country, or do we put our future on the line? Do we risk our cohesion and our prosperity by delaying long-overdue investments?”

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Scholz’s pitch to voters includes pledges to “modernize” Germany’s strict self-imposed rules on running up debt, to increase the national minimum wage and to reduce value-added tax on food.

Center-right challenger Friedrich Merz responded that “you’re leaving the country in one of its biggest economic crises in postwar history.”

“You’re standing here and saying, business as usual, let’s run up debt at the expense of the younger generation, let’s spend money and … the word ‘competitiveness’ of the German economy didn’t come up once in the speech you gave today,” Merz said.

The chancellor said Germany is Ukraine’s biggest military supplier in Europe and he wants to keep that up, but underlined his insistence that he won’t supply long-range Taurus cruise missiles, over concerns of escalating the war with Russia, or send German troops into the conflict. “We will do nothing that jeopardizes our own security,” he said.

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Merz, who has been open to sending the long-range missiles, said that “we don’t need any lectures on war and peace” from Scholz’s party. He said, however, that the political rivals in Berlin are united in an “absolute will to do everything so that this war in Ukraine ends as quickly as possible.”

What are their chances?

Polls show Scholz’s party trailing well behind Merz’s main opposition Union bloc, which is in the lead. Vice Chancellor Robert Habeck of the environmentalist Greens, the remaining partner in Scholz’s government, is also bidding for the top job — though his party is further back.

The far-right Alternative for Germany, which is polling strongly, has nominated Alice Weidel as its candidate for chancellor but has no chance of taking the job because other parties refuse to work with it.

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Germany’s electoral system traditionally produces coalitions, and polls show no party anywhere near an absolute majority on its own. The election is expected to be followed by weeks of negotiations to form a new government.

Confidence votes are rare in Germany, a country of 83 million people that prizes stability. This was only the sixth time in its postwar history that a chancellor had called one.

The last was in 2005, when then-Chancellor Gerhard Schröder engineered an early election that was narrowly won by center-right challenger Angela Merkel.

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Canada deputy PM quits amid tariff rift with Trudeau

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Canada Deputy Prime Minister Chrystia Freeland quit Monday in a surprise move after disagreeing with Justin Trudeau over US President-elect Donald Trump’s tariff threats.

Freeland also stepped down as finance minister, and her resignation marked the first open dissent against Prime Minister Trudeau from within his cabinet and may threaten his hold on power.

Liberal Party leader Trudeau lags 20 points in polls behind his main rival, Conservative Pierre Poilievre, who has tried three times since September to topple the government and force a snap election.

“Our country today faces a grave challenge,” Freeland said in her resignation letter, pointing to Trump’s planned 25 percent tariffs on Canadian imports.

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“For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada.”

First elected to parliament in 2013, the former journalist joined Trudeau’s cabinet two years later when the Liberals swept to power, holding key posts including trade and foreign minister, and leading free trade negotiations with the EU and the United States.

Most recently, she had been tasked with helping lead Canada’s response to moves by the incoming Trump administration.

Canada’s main trading partner is the United States, with 75 percent of its exports each year going to its southern neighbor.

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In her resignation letter, Freeland said Trudeau wanted to shuffle her to another job, to which she replied: “I have concluded that the only honest and viable path is for me to resign from the cabinet.”

As finance minister, she explained the need to take Trump’s tariffs threats “extremely seriously.”

Warning that it could lead to a “tariff war” with the United States, she said Ottawa must keep its “fiscal powder dry.”

“That means eschewing costly political gimmicks, which we can ill afford,” she said in an apparent rebuke of a recent sales tax holiday that critics said was costly and aimed at bolstering the ruling Liberals’ sagging political fortunes.

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Trouble for Canada Trudeau

Dalhousie University professor Lori Turnbull called Freeland’s exit “a total disaster.”

“It really shows that there is a crisis of confidence in Trudeau,” she said. “And makes it much harder for Trudeau to continue as prime minister.”

Until now, the cabinet has rallied around Trudeau as he faced pockets of dissent from backbench MPs, noted Genevieve Tellier, a professor at the University of Ottawa.

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Freeland’s rejection of his economic policies poses “a big problem,” she said, and shows his team is not as united behind him as some thought.

Freeland’s departure comes on the same day she was scheduled to provide an update on the nation’s finances, amid reports the government would blow past Freeland’s deficit projections in the spring.

“This government is in shambles,” reacted Poilievre’s deputy leader, Andrew Scheer, to Freeland’s news, saying “Even she has lost confidence in Trudeau.”

Housing Minister Sean Fraser, who also announced Monday he was quitting politics, described Freeland as “professional and supportive.”

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One of her closest friends and allies in cabinet, Anita Anand, told reporters: “This news has hit me really hard.”

Freeland said she would run in the next election, expected in 2025.

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