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Hi Intriguer. My time at last year’s COP climate talks in the United Arab Emirates (UAE) left me with a lasting impression of the country’s determination to get stuff done.
Whether it’s building ski slopes in the desert or mega infrastructure for global conferences, the UAE clearly wants to keep moving.
Today’s briefing leads with an update on the UAE that’s less flashy, though no less intriguing – its impending exit from a global financial ‘grey list’.
– Helen Zhang, Co-Founder
PS – With thanks to some ‘in-the-know’ Intriguers who prefer to remain anonymous, we’re publishing a who’s who at the UN (New York) this Friday. It’ll be free to anyone who refers a friend to Intrigue this week! Simply use your unique referral link at the bottom of today’s briefing.
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US drafts Security Council resolution opposing Rafah offensive. The US has proposed a UN Security Council resolution calling for a temporary ceasefire in Gaza and opposing a planned Israeli operation in the southern city of Rafah. It comes after the US signalled it would veto an earlier Algerian proposal calling for an immediate humanitarian ceasefire, citing concerns Algeria’s draft would hinder parallel efforts to negotiate a broader Israel-Hamas deal.
China cuts key interest rate. China’s central bank has made a record cut to a benchmark mortgage interest rate, from 4.2% to 3.95%. The move is intended to help revive the country’s ailing property sector.
US credit card giants to merge. Capital One has agreed to buy Discover Financial Services in a $35B all-stock merger that would create the largest US credit card company by loan volume. The deal, still to be greenlit by regulators and shareholders, is expected to be completed later this year or early the next.
Australia plans to double its navy. Canberra has unveiled plans to more than double Australia’s surface fleet over the next decade, citing its region’s “potential for conflict”. The US$7.25B move aims to lift the number of combat-ready warships from 11 to 26, including six large optionally crewed surface vessels (LOSVs) that can be operated remotely. The government says it’ll be Australia’s largest fleet since WWII.
von der Leyen to run for second term as EU Commission President. Ursula von der Leyen has now confirmed what everyone already assumed – she will be seeking a second term as head of the EU’s executive arm. Her fate will be linked to how well her party (the European People's Party) does in June’s European Parliament elections.
TOP STORY
The UAE could be out of the financial bad books
The United Arab Emirates is set to be taken off a global financial ‘grey list’ as soon as this week, according to Bloomberg.
What’s this grey list?
The G7 club of rich nations created a Financial Action Task Force (FATF) back in 1989 with a mission to curb money laundering (and later, terrorism financing).
The Paris-based FATF found success with one tactic in particular: to name-and-shame countries into plugging the holes in their financial systems. Over 70% of countries that’ve ever been placed on a FATF black or grey list have gone on to make the reforms necessary to get themselves pulled back off the list.
This is because listed countries not only face reputational damage that can leave investors jittery, but also tougher treatment from ratings agencies, leading to fewer willing lenders and higher borrowing costs.
One study actually suggests a grey listing leads on average to:
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A drop in capital flows equivalent to 7.6% of GDP
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A 3% drop in foreign direct investment, and
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A 10% drop in cross-border payments.
There are now 23 countries on the dreaded grey list – these are the ones with problems, but they’ve committed to working with the FATF to fix them. They include countries from Syria and Yemen through to Croatia and South Africa.
Meanwhile, only three places appear on the black list: North Korea, Iran, and Myanmar. These ones are high-risk and low-care, so their listing is really a signal that the rest of the world should just take counter-measures.
So how did the UAE end up getting grey-listed?
The UAE was already in the FATF’s crosshairs as a magnet for dirty money, but the body formally grey-listed the UAE in March 2022, just days after Russia invaded Ukraine. It came as wealthier Russians were fleeing Western sanctions (and Russian drafting) – up to half a million Russians ended up relocating there.
But given the UAE’s significance as a financial hub, the FATF’s move to grey-list it was arguably the most significant listing in the watchdog’s history.
What did the UAE do to get off the list?
The petro-state isn’t too dependent on capital flows or foreign direct investment, so its economy wasn’t particularly vulnerable to swings caused by its grey-listing.
But the UAE’s image was vulnerable – it prides itself not only as a regional hub, but also a serious global player that hosts COP climate talks and AI research. So the Gulf state moved quickly, including:
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Tripling the number of money laundering fines it issued
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Sanctioning several non-compliant financial institutions
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Cracking down on pool-side crypto scammers, and
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Making some high-profile arrests, including hedge fund trader Sanjay Shah who’s accused of defrauding Denmark of a cool $1.3B
Of course, that’s not to say it’s all gahwa and skittles in the UAE now.
There are still plenty of colourful characters lying low there (including the former king of Spain and the former president of Afghanistan), it still features in Transparency International reports, and the US has still objected to the way Russia uses UAE intermediaries to skirt sanctions and restrictions.
But all in all, both the UAE and the FATF will notch this one up as a win.
INTRIGUE’S TAKE
Lord knows we need good news stories these days, and this one fits the bill. It’s not just about making it tougher for criminals, terrorists, and scammers to launder their cash and evade the law.
It’s also about our international system still working; international rules of the road still meaning something; and national governments still engaging in good faith to tackle trans-national risks to us all.
In the jungle that is today’s world of international relations, we’ll take the win.
Also worth noting:
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The Financial Action Task Force (FATF) has 40 full members and nine regional associations acting as associate members
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In 2022, the UAE accounted for over 32% of all foreign direct investment in the Middle East and North Africa.
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MEANWHILE, ELSEWHERE…
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🇵🇰 Pakistan: A senior election official has admitted to rigging the results of this month’s election to favour military-backed parties, as protests continue to break out across the country. The two main military-backed parties still haven’t reached a final agreement to form a minority coalition government.
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🇫🇷 France: The French government has unveiled plans to cut spending by an extra €10B after revising the country’s projected 2024 growth rate down from 1.4% to 1%. The cuts will impact ministry budgets, development payments, and green subsidies.
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🇵🇼 Palau: The leaders of Palau, Micronesia, and Marshall Islands have written to US lawmakers urging them to pass key funding for the allied Pacific nations or risk losing ground to China. The US renewed key pacts with the three states last year, retaining exclusive military access to an area of the Pacific that’s bigger than the continental United States.
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🇧🇷 Brazil: Israel has declared Brazilian President Luiz Inacio Lula da Silva ‘persona non grata’ after the South American leader compared Israel’s ongoing operation in Gaza to the Holocaust. Lula, who has repeatedly criticised Israel, made the remarks during an African Union meeting.
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🇷🇼 Rwanda: Kigali has brushed aside a US request to withdraw Rwandan troops and weapons from eastern Congo, insisting it’s defending itself against armed groups. Rwanda has been accused of backing a Congolese insurgency group named M23, which continues to make inroads in eastern Democratic Republic of the Congo.
EXTRA INTRIGUE
Here’s what people have been tweeting about
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‘Houthis’ is trending in 🇦🇺 Australia after the Yemen-based group claimed to have sunk a UK-registered cargo ship in the Red Sea earlier this week.
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🇮🇳 Indian folks have used the hashtag #UP_Police_Leak to discuss the alleged leak of a police exam paper, which has created an uproar among candidates who took the test on 17 February.
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And ‘Yulia Navalnaya’ has been trending on 🇧🇪 Belgian Twitter after Alexei Navalny’s widow blamed Putin for his death and vowed to continue her late husband’s work from exile.
PODCAST OF THE DAY
Intrigue’s very own co-founder John has joined the fine folks over at Lykeion on their latest podcast episode, titled ‘Xi Jinping will face the largest internal threat to his position’. It’s a topic John knows well, having served for years in China as a diplomat.
Check out the conversation on YouTube above, or wherever you get your podcasts.
DAILY POLL
Do you think about things like social responsibility, financial greylists, or sustainability before investing? |
Yesterday’s poll: Do you think Navalny's death could be a reckoning moment for Russian politics?
🟨⬜️⬜️⬜️⬜️⬜️ 🕊️ Yes, Navalny has become a sort of martyr (24%)
🟩🟩🟩🟩🟩🟩 👎 No, Putin's grip is too secure (74%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (2%)
Your two cents:
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👎 C: “While media would love to portray the death of Nalvany as a moment of change for Russian politics, Putin is sitting pretty on a foundation of a divided world, economic interests in Russian exports, and control of narrative and government institutions at home.”
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🕊️ C.K.S: “One more vector of pressure on Putin…”
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✍️ G.S: “It will be interesting to see what happens in the next Russian ‘election’.”
Curious about who’s who at the UN in New York? With thanks to some very ‘in-the-know’ Intriguers, we’ll be spilling the tea this Friday. To get the inside word, all you need to do is refer at least one friend to Intrigue this week!
Simply use your unique referral code below to share the Intrigue.