Fdd's overnight brief

November 8, 2018

In The News


As new U.S. sanctions on Iran start to bite this month, Western companies still doing business in the country face fresh hurdles in a market that has been both enticing and tough to crack. – Wall Street Journal

The U.S. began enforcing a tough new slate of economic restrictions against Iran on Monday, including a threat to sanction buyers of Iranian crude. That has refineries in Europe and Asia—recent, big buyers of Iran oil—looking for alternative supplies. Russian oil companies have stepped in, stealing customers from Iran. – Wall Street Journal

The United States is warning other countries not to allow Iranian oil tankers into their territorial waters or ports, saying such access may run afoul of U.S. sanctions and not only incur penalties, but also result in catastrophic economic and environmental damage should an accident occur. – Associated Press

Washington will focus on pressuring Iran financially and contesting its activities in Syria, Iraq and Yemen where the Persian nation enjoys broad influence, the U.S. envoy to Syria said Wednesday, adding that Tehran should eventually withdraw all Iran-commanded forces from Syria. – Associated Press

France has blasted President Donald Trump’s decision to reimpose sanctions on Iran, promising to lead Europe in defiance of the punitive financial measures. Economy Minister Bruno Le Maire explained on Tuesday that Europe is moving forward with setting up a special financial channel to continue trading with Iran. – Newsweek

Skyrocketing inflation, a shortage of raw materials and fewer imports have made medications in Iran both scarce and costly. Although humanitarian goods, such as medicine and food, are exempt from U.S. sanctions, severe restrictions on Iran’s financial institutions have forced the outside world to reconsider doing business with the Islamic Republic. Experts fear the latest round of sanctions will make the situation even worse. – LA Times

Editorial: There is a case to be made for tougher sanctions on Iran, such as those imposed Monday by the Trump administration. Since signing the 2015 accord limiting its nuclear program, Tehran has only stepped up its aggressions. It has supplied missiles to Houthi rebels in Yemen for use against Saudi Arabia, and it has smuggled them into Lebanon and Syria for potential use against Israel. It has been caught twice in four months trying to murder opponents in European countries. – Washington Post

Esfandyar Batmanghelidj writes: It should be welcome news for Iran that the Trump administration has granted eight countries Significant Reduction Exemptions (SREs) from U.S. sanctions against the Islamic Republic. […]But a closer examination of the waivers suggests that the Trump administration has deployed its concessions tactically. – Bloomberg


Egyptian naval forces fired on a Palestinian fishing boat and killed a fisherman on Wednesday, Gaza’s interior ministry said, but an Egyptian military source denied the report. Egypt’s navy has in the past shot at Gazans whom it has accused of crossing the maritime border. There was no initial information on whether the fishing boat had crossed into Egyptian waters. – Reuters

Prime Minister Benjamin Netanyahu on Wednesday spoke with German Chancellor Angela Merkel following her recent announcement that she will not seek reelection, thanking her for contributing to Israel’s security. – Times of Israel

Egyptian President Abdel Fattah al-Sisi has reportedly managed to convince Palestinian Authority President Mahmoud Abbas to agree to accept the ceasefire understandings reached between Hamas and Israel, the London-based Al Hayat reported on Thursday. – Ynet News

The new administration in Brazil has reiterated its position that despite mounting pressure from the Arab world, it will remain true to its word and relocate its embassy in Israel from Tel Aviv to Jerusalem. – Algemeiner

Saudi Arabia

Israel-based NSO Group Ltd. may have helped Saudi Arabia track and kill government critic Jamal Khashoggi at the kingdom’s consulate in Istanbul last month, fugitive U.S. whistle-blower Edward Snowden told an Israeli audience by video conference. – Bloomberg

Saudi Arabia’s King Salman has embarked on a domestic tour this week with his favorite son, demonstrating his support for his chosen heir despite the crisis spawned by the murder of journalist Jamal Khashoggi. – Reuters

Saudi Arabian Military Industries and Spain’s state-owned shipbuilder Navantia SA started a joint venture to manufacture warships in the kingdom, preserving a deal threatened by a global outcry over the murder of government critic Jamal Khashoggi. – Bloomberg

Israeli Muslims will not be able to reach Mecca for the annual hajj pilgrimage because of a change in passport regulations by Saudi Arabia, the Haaretz newspaper reported. – Bloomberg

Middle East & North Africa

At least 65 Islamic State group fighters have been killed around their last enclave in Syria despite a pause in a two-month Kurdish-led assault, a monitor said Wednesday. – Agence France-Presse

Yemen’s rebel chief vowed Wednesday he would never surrender to Saudi-backed forces, as international aid groups appealed for safe passage for civilians caught in the flashpoint port of Hodeida. – Agence France-Presse

The U.S. has expressed hope that Israel will defy a newly installed Russian missile defense system to continue bombing targets linked to Iran in Syria. James Jeffrey, Washington’s envoy to Syria, told reporters Wednesday that the U.S. was betting on Russia and Israel’s strategic relationship to continue despite an international incident in September that resulted in the downing of a Russian military aircraft. – Newsweek

Barak Barfi and Michele Dunne write: Egypt saw a period of economic growth in the late 1990s and early 2000s, but it was fueled primarily by domestic consumption rather than exports. As a result, the country had trouble balancing payments and experienced a severe foreign currency shortage. Historically, it relied on tourism and foreign direct investment to cover such shortfalls, but those revenue streams have dried up significantly. – Washington Institute

Korean Peninsula

President Donald Trump said Wednesday the U.S. is “in no rush” after talks between his top diplomat and a senior North Korean envoy were postponed, throwing stalled diplomacy over the North’s nuclear weapons into further uncertainty. – Associated Press

South Korea’s foreign minister quoted U.S. officials as saying that it was North Korea that canceled a meeting this week between U.S. Secretary of State Mike Pompeo and a senior North Korean official on nuclear issues. – Associated Press

North Korean leader Kim Jong Un is reluctant to hand over details of his country’s weapons and nuclear facilities to the United States because he fears he may be attacked. Kim apparently made the admission during talks with South Korea President Moon Jae-in this year. – Newsweek

The outgoing commander of US forces in South Korea on Thursday urged Seoul and Washington to maintain their alliance as differences mount in their approach to the nuclear-armed North. – Agence France-Presse


American companies occupy choice real estate at a mega-Chinese trade show here but also stand at an uncomfortable intersection: between the huge business opportunity of the China market and a U.S. president critical of their investment in it. – Wall Street Journal

President Donald Trump’s trade war with China didn’t end with the congressional elections this week. Despite losing Republican control of the House, Trump is unlikely to see anything in the outcome that will persuade him to drop his hardball tactics with Beijing. – Politico

A Chinese newspaper representing the nation’s official Communist Party has published an editorial suggesting that Democrats winning control of the House of Representatives on Tuesday will have little impact on President Donald Trump’s China policy. – Newsweek

Research from UBS shows President Trump’s tariffs on Chinese goods are having a material effect on US-China trade. The analysts reviewed US import data for $34 billion of products that fell within the first tranche of US tariffs on July 6. And the decline has been “sharp and unambiguous”. – Business Insider


A Pakistani Christian woman who was cleared last week of blasphemy charges after spending eight years on death row has been released from prison but remains under government protection in Islamabad because of threats to her life, officials said Thursday. – New York Times

Built to hunt Russian submarines, Canadian frigate HMCS Calgary is instead chasing Japanese and U.S. subs in western Pacific drills as Canada joins other maritime nations in seeking to contain Chinese influence in the Indo Pacific. – Reuters

China and Australia can fully cooperate in the Pacific islands, the Chinese government’s top diplomat State Councillor Wang Yi said on Thursday following a meeting with Australian Foreign Minister Marise Payne in Beijing. – Reuters

Richard Glover writes: Australia’s ambassador to the United States is nearly always a cheerleader for the Americans, but ahead of Tuesday’s midterm elections, Joe Hockey was unable to resist a small note of criticism. “It can be really hard work trying to vote in USA,” he tweeted as voting got underway. “Registration, local voting, a work day, complicated voting mechanisms. Australia is blessed to have a genuinely independent and simple electoral process.” – Washington Post


President Donald Trump argued with a journalist on Wednesday over who was responsible for separatist rebels taking control of Ukraine’s Crimean Peninsula and allowing the Kremlin to annex the territory in 2014. – Newsweek

Russian President Vladimir Putin urged Russia’s defence industry to create a new integrated defence export strategy as the country faces changing conditions in the global export market. Chairing a meeting of the Russian Federal Commission for Military Technology Co-operation with Foreign States on 6 November, Putin said that as the country’s defence exports remained at USD15 billion, the Russian government was continuing to monitor trends in the global military equipment market. – IHS Jane’s

Russian state media isn’t taking Wednesday’s news from America too well. On state TV, reports of U.S. Democrats taking control of the House of Representatives were described as a “very negative” outcome for the Kremlin, predicting “political chaos” in Washington and new sanctions on Russians now a certainty. – The Daily Beast

Leonid Bershidsky writes: The detention of Dmitry Rybolovlev for questioning in Monaco on Tuesday is only the latest of the Russian billionaire’s troubles –and a signal to other wealthy Russians who might dream of getting rid of all their assets in the home country, as Rybolovlev did: In the current political climate, the West won’t be as welcoming of their money, and their ways, as it once was. – Bloomberg

Eli Lake writes: Despite probing and trolling, a Russian cyberattack is the dog that did not bark in Tuesday’s midterm elections. This is the assessment of the Department of Homeland Security, which says there were no signs of a coordinated campaign to disrupt U.S. voting. – Bloomberg



French President Emmanuel Macron waded into controversy Wednesday by praising Philippe Pétain, who oversaw France during its Nazi occupation, as a “great soldier” during World War I. – Wall Street Journal

European moderates are welcoming a re-balancing of U.S. politics after the midterm election but few expect big change in relations with President Donald Trump.  – Associated Press

Germany’s foreign minister, Heiko Maas, has called for a new worldwide discussion on arms control, following the US decision to withdraw from the Intermediate-range Nuclear Forces (INF) Treaty. – IHS Jane’s

Editorial: As impressive as Emmanuel Macron’s reform successes have been, this week brings word of a failure by the French President that’s worth cheering. There are growing signs that the Europe-wide digital tax cherished by Paris is falling by the wayside. – Wall Street Journal


Dozens of students kidnapped from a boarding school in a restive region of Cameroon were freed late Tuesday after being held hostage for about two days, according to local and military officials. – New York Times

Sudan’s foreign ministry said on Thursday that Khartoum and Washington have agreed to launch the second phase of strategic talks aimed at removing Sudan from the United States’ state sponsors of terrorism list. – Reuters

Saudi Arabia has made a $1 billion bid for a broad partnership with South African state-owned defence group Denel that would include acquisition of a minority stake in a joint venture with Germany’s Rheinmetall, a source familiar with the offer said. – Reuters

United States

At least 11 people were wounded, including a sheriff’s deputy, late Wednesday in a shooting at a country and western dance venue that was holding an event for college students in Thousand Oaks, Calif., officials said. – New York Times

A Syrian man accused in 2011 of designing and assembling electronic parts for radio-controlled roadside bombs for attacks on U.S. military forces in Iraq was convicted on Wednesday in an Arizona federal court, U.S. officials said. – Reuters

Seth G. Jones writes: The threat from right-wing terrorism in the United States—and Europe—appears to be rising. […]With the rising trend in right-wing extremism, U.S. federal and local agencies need to shift some of their focus and intelligence resources to penetrating far-right networks and preventing future attacks. – Center for Strategic and International Studies

Cyber Security

An unprecedented federal and state collaboration to defend election systems against Russian interference ended with no obvious voting system compromises, although it’s not entirely clear why. – Associated Press

Unfortunately, Russian hackers won’t need to come calling on Election Day. Cyberexperts warn that they could use more sophisticated means of changing the outcomes of close races or sowing confusion in an effort to throw the U.S. elections into disrepute. – Newsweek

Facebook announced Tuesday that it removed over 100 Facebook and Instagram accounts the day before the midterm elections “due to concerns that they were linked to the Russia-based Internet Research Agency,” according to a Wednesday report from The New York Times. The platform spotted the trolls, whom they linked but did not explicitly connect to Russia’s Internet Research Agency, after receiving a tip from a law-enforcement agency on Sunday. – The Daily Beast


The Democratic takeover of the House poses challenges to the Trump administration’s plans to create a Space Force, augment the American nuclear arsenal and draw on military funds to build parts of the border wall, as the Pentagon faces an era of greater scrutiny and tighter funding. – Washington Post

Tuesday’s midterm elections may have flipped the House to the Democrats and increased Republican control of the Senate, but the outcome’s impact on a potential budget deal to avoid the return of sequestration will likely be limited, analysts predict. – Defense News

Beyond GOP House Armed Services Committee Chairman Mac Thornberry handing the gavel to the panel’s top Democrat, Rep. Adam Smith, expect a major reshuffling in middle management on the panel and on its Senate counterpart. Where Thornberry, R-Texas, has been a staunch advocate of defense spending increases, Smith has been a critic, particularly on nuclear weapons, who’s promised stricter oversight of overseas military operations. – Defense News

Trump Administration

President Trump fired Attorney General Jeff Sessions on Wednesday, replacing him with a loyalist who has echoed the president’s complaints about the special counsel investigation into Russia’s election interference and will now take charge of the inquiry. – New York Times

The Democratic reaction to the attorney general’s firing also illustrated a new reality for the president. In the past, Mr. Trump could take such striking action with little fear of repercussions from Capitol Hill; Republicans were reluctant to challenge him, and Democrats were powerless to do so. Now, after Democrats take control in early January, the party will have the authority to convene hearings, call witnesses and investigate the president’s actions, and they made clear on Wednesday that they intend to do so. – New York Times

President Trump’s decision to fire Attorney General Jeff Sessions and appoint Mr. Sessions’s former chief of staff, Matthew G. Whitaker, as the acting head of the Justice Department immediately raised questions about what the move means for Robert S. Mueller III, the special counsel leading the Russia investigation. – New York Times

President Trump took the exceedingly rare step of suspending the White House credentials of Jim Acosta, the chief White House correspondent for CNN, on Wednesday after an intense verbal clash at a news conference earlier in the day. – New York Times

President Trump on Wednesday vowed a “warlike posture” should newly empowered House Democrats exercise oversight, while simultaneously calling for bipartisan cooperation, highlighting the changed dynamic in Washington after midterm elections that divided Congress after two years of full Republican control. – Wall Street Journal

Editorial: President Trump’s political credo is never admit a mistake or setback, and on cue Wednesday he called the midterm election results a “tremendous success.” Perhaps he even believes it, but he shouldn’t. The results weren’t the “blue wave” of media and Democratic desire, but they were overall a GOP defeat with warnings for 2020. – Wall Street Journal

Editorial: The Attorney General shouldn’t fire Mr. Mueller, as the President essentially said himself at his Wednesday news conference. Mr. Trump needs an individual of stature and judgment who will have the trust of the department’s lawyers, who is capable of independence, but who also understands that the Justice Department is part of the executive branch and not a law unto itself. – Wall Street Journal

Editorial: President Trump’s Wednesday firing of Attorney General Jeff Sessions was not surprising, but it should still be shocking. Mr. Sessions’s sin was not that he was insufficiently wedded to the president’s agenda; indeed, the attorney general was perhaps the most effective member of the Cabinet in advancing Trumpist policies. Rather, the president complained that Mr. Sessions failed to protect him, as a hired lawyer protects a private client, from legitimate law enforcement inquiries. – Washington Post

Amanda Erickson writes: Tuesday night, Democrats won control of the House of Representatives. Already they’ve promised a raft of ambitious domestic shifts. Those will be hard enough without control of the Senate or the presidency. But look beyond the country’s borders, and things get tougher. The Democrats cannot do much to change the president’s foreign policy course. – Washington Post

Ruth Marcus writes: Matthew Whitaker, President Trump’s handpicked selection to replace Jeff Sessions as attorney general, is the wrong choice for the job at exactly the wrong time. Of course, from Trump’s point of view, that is the point. – Washington Post