🌍 Brazil and China coordinate currencies

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🗺️ AROUND THE WORLD

1. 🇯🇵 Japan: In a break with its Western allies, Japan has started purchasing Russian oil above the G7’s price cap of $60 per barrel. Japan has been a steadfast supporter of Ukraine but remains reliant on Russia for energy.

2. 🇧🇬 Bulgaria: Former Prime Minister Boyko Borissov will try his luck at assembling a coalition, after his centre-right party won the most votes in Bulgaria’s election on Sunday. Analysts say Borissov will struggle to form a government.

3. 🇻🇺 Vanuatu: The US plans to build an embassy in the Pacific Island nation of Vanuatu. In an effort to compete with China’s influence in the region, the US has already opened a mission in Solomon Islands and has plans to open more in the Maldives, Tonga, and Kiribati.

4. 🇧🇿 Belize: Taiwanese President Tsai Ing-Wen began a three-day visit to Belize yesterday (Monday), after an earlier visit to Guatemala. Belize and Guatemala are two of only 13 countries that recognise Taiwan.

5. 🇰🇪 Kenya: Opposition leader Raila Odinga has called off demonstrations that have been shaking the country for two weeks. In exchange, President William Ruto agreed to consider Odinga’s proposed changes to the electoral commission.

_{✏️ Correction! Milo Djukanovic did not, in fact, lose to himself in Montenegro’s election on Sunday as reported yesterday. The Europe Now! party candidate and president-elect is Jakov Milatovic. Thank you to Rebecca for catching our error!}

🇨🇳 CHINA | GEOECONOMICS

China and Brazil seek to drop the US Dollar

Briefly: China and Brazil have developed a plan to trade in their own currencies rather than the USD. Several countries (eg Iran, Pakistan, and Russia) already participate in similar schemes, which are designed to skirt the dollar’s dominance as a global reserve currency.

And it’s not hard to understand why China wants more of its yuan (or renminbi) in circulation. The internationalisation of the yuan means:

1. 🏗️ Less exchange rate risk for China’s businesses and investors

2. 💸 Higher demand for China’s bonds (meaning China pays lower interest on its debt), and

3. ❌ More options to impose and/or circumvent financial sanctions

The yuan’s internationalisation took a step forward in 2016 when it was included in the IMF’s basket of currencies to support lending. Some banks now expect the yuan to be the third-largest reserve currency by 2030.

Intrigue’s take: Mighty as China might be, its yuan won’t supplant the US dollar any time soon. And China wouldn’t actually want such an outcome right now.

Being a truly global reserve currency would mean Beijing allowing the world to freely buy and sell yuan. But that would mean Beijing removing many of the economic controls it has in place. And ultimately, that would mean Beijing choosing between surging unemployment and even higher debt.

For now, it’s more likely we’ll see some countries look to make a statement and hedge risks by using yuan. But they (along with the rest of the world) will also need to use dollars and Euros for a while yet. The USD and Euro are baked into the global economy, and replacing them won’t be quick, easy, or even desirable.

Also worth noting:

• Only 1.33% of global payments were in yuan in January, compared with 40% in US dollars, 38% in Euros, 7% in pounds and 3% in yen. The world’s central banks hold around 60% of their reserves in USD.

• The BRICS – Brazil, Russia, India, China, and South Africa – are reportedly developing a new joint currency, though the idea has its critics.

• Brazil did a record $152.8B in bilateral trade with China last year, making Beijing its largest trading partner.

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Today’s briefing is sponsored by The Daily Upside

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🏴‍☠️ GULF OF GUINEA | SECURITY

Crew members still missing after pirate attack along busy shipping route

Briefly: Up to six crew members are still missing after pirates attacked a Danish oil tanker in the Gulf of Guinea, along one of the world’s busiest cargo routes. Shipping company Monjasa announced on Friday that the French and Nigerian navies had located the ship and escorted it to a safe port.

The ship and cargo were untouched, which unfortunately suggests ransom demands for the crew are now probably on their way to Monjasa HQ.

Some context: Thought pirates were a thing of the past? Think again. The ICC-International Maritime Bureau’s annual piracy report recorded 115 attacks in 2022. This was actually fewer than in 2021. But cases are rising in Southeast Asia, where around half of all piracy incidents now occur.

Intrigue’s take: Our loyal readers won’t be surprised to learn that the Russo-Ukraine War has, along with everything else, likely exacerbated piracy in West Africa. By forcing Europe to focus its naval resources closer to home (and Russia), the war has arguably left the key Gulf of Guinea trade route more exposed to piracy.

Also worth noting:

• 71% of all maritime kidnappings in 2022 were in the Gulf of Guinea.

• The Danish military sent a frigate to patrol the Gulf of Guinea in 2021, but recalled the ship just before the start of the Russo-Ukraine War.

👀 EXTRA INTRIGUE

We’re very online, so you don’t have to be.

• Brazilian President Lula da Silva is surrounded by threats

• Asian startups fear the age of easy money is now over 

• Shifting away from Chinese ports won’t be easy

• Evan Gershkovich’s arrest marks a new era of hostage diplomacy

• The secret history of the Cuban Missile Crisis

If you’d like to see more of our recommendations, make sure to refer two friends to gain access to our Intrigue Top Picks!

💬 QUOTE OF THE DAY

Central Asia is past due for a return to geopolitical prominence, according to Professor Jennifer Brick Murtazashvili. To hear why, check out her Intrigue Outloud interview on Apple Podcasts, Spotify, or wherever.

🗳️ POLL TIME!

Yesterday’s poll: What (if anything) do you think Trump’s indictment says about the US?

🟩🟩🟩🟩🟩🟩 📈 US institutions remain vibrant, and the truth will prevail (57%)

🟨🟨🟨⬜️⬜️⬜️ 📉 The fractures within the US are now beyond repair (32%)

🟨⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (10%)

Your two cents:

• ✍️ S.B: “It’s tempting to choose either/or, but it’s both/and. There are fractures within the US, obviously. But this is a global not a local trend.”

• 📈 J.P.R: “Everyone bemoans accountability as “well the other side could do it to your person!” Good. That’s how this works.”