🌏 Sri Lanka’s debt relief woes spell trouble for the developing world

Today’s edition is a 4.5 min read:

• 🇱🇰 Sri Lanka is still waiting for debt relief.
• 🇰🇵 A record year for North Korean hackers.
• ➕ Plus: The death of Gen. Musharraf leaves a complex legacy in Pakistan, how the papers are covering Ecuador’s failed referendum, and the football fraudsters are back.

– VC & EP

🗺️ AROUND THE WORLD

1. 🇰🇿 Kazakhstan: The US Treasury will remove sanctions against a former subsidiary of Russia’s largest bank (Sberbank) after the Kazakh government purchased it. Sberbank was forced to sell assets around the world when international sanctions hit Russia.
2. 🇬🇧 United Kingdom: Ukrainian President Zelensky made a surprise visit to the UK on Wednesday (8 January) to meet with Prime Minister Sunak and King Charles III. Britain promised to continue supporting Ukraine’s war effort through a pilot training program.
3. 🇸🇧 Solomon Islands: Daniel Suidani, the premier of a key Solomons province and a vocal China-sceptic, was forced out of office through a surprise no-confidence vote on Tuesday (7 February). Protestors took to the streets in response.
4. 🇲🇽 Mexico: Mexico has sent its esteemed rescue dogs to Turkey to help search for earthquake survivors. The canines became famous after Mexico’s 2017 quake, when one pup named Frida was credited with saving lives (while donning protective goggles).
5. 🇪🇷 Eritrea: Eritrean President Afwerki landed in Nairobi on Wednesday for his first visit to Kenya since 2018. The 77-year-old Afwerki, in power since 1993, has rarely left Eritrea since his forces became involved in the neighbouring Ethiopian civil war two years ago.

🇱🇰 SRI LANKA | ECONOMY

Sri Lanka’s debt woes spell trouble for the developing world

Briefly: Members of the Paris Club – a group of mostly-Western creditor countries – and the IMF are waiting on “credible and specific assurances” from China in order to move forward with a $2.9B loan to Sri Lanka. While other major lenders have promised to fully restructure Sri Lankan debt, China has thus far only promised a two-year moratorium on payments.

Sri Lanka’s economic woes reached boiling point last May, when the country defaulted on its loans for the first time. Crisis soon followed: inflation soared to 90%, citizens fled the country at record rates, and nationwide protests forced the sitting president into exile.

Sri Lanka has been working to restructure its debt ever since, and secured initial support from the IMF in September. Its other major creditors – Japan and India – are onboard, and Sri Lanka has adopted tough austerity measures to meet the IMF’s terms. But without full-throated support from China, Sri Lanka’s largest sovereign creditor, the IMF won’t proceed.

Intrigue’s take: China is learning what the West learned in the 80s: mullets were a mistake and countries with failing economies struggle to pay back loans. China might also learn that simply rescheduling loans often prolongs the borrower’s pain, with little benefit for the lender. No doubt Beijing is wary of setting a precedent for the many other loans it has extended to developing countries. Being a global leader sounds fun until you try it.

Also worth noting: 

• Zambia’s debt restructuring talks, which were once seen as a potential model for others in Africa, hit a snag over repeated disagreements between China and other creditors.
• The IMF said in its 2022 annual report that 60% of developing countries are “at high risk of or in debt distress.” Nearly 40% of developing world debt is held by China.

📰 GLOBAL PERSPECTIVES

How different newspapers covered: The referendum loss by Ecuadorian President Lasso (no relation) on whether to allow extradition as a way to tackle the country’s organised crime problem.

Links: Telesur, France24, MercoPress. 

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🇰🇵 NORTH KOREA | CRYPTO

2022 was a record year for North Korean crypto theft

Briefly: Crypto might’ve lost its shine for investors, but North Korean hackers are still going full crypto-bro. According to an unreleased UN report obtained by Reuters, hackers from North Korea stole a record sum of crypto assets last year. South Korean intelligence places the value of Pyongyang’s cyber-loot at around $630M.

Beyond cryptocurrency wallets, North Korean hackers also targeted foreign aerospace and defence companies to collect sensitive information.

Intrigue’s take: When your economy is suffering under crushing sanctions, you gotta get creative with your business ventures. Virtual asset theft is only a small part of how the North Korean regime makes money. It also dabbles in illicit drug production, weapons sales, and overseas indentured labour. Quite the LinkedIn profile.

Also worth noting: 

• The US has accused North Korea of selling weapons and munitions to Russia, a claim Pyongyang has denied.
• China remains North Korea’s biggest trading partner and closest ally, but bilateral trade decreased by nearly 90% between 2019 and 2021 as a result of pandemic complications and China’s Zero-Covid policy.

🧑‍💼 PROFILE OF THE DAY

Former Pakistani military ruler Pervez Musharraf died last Sunday

Musharraf came to power in 1999 following a bloodless military coup, and governed Pakistan until his ouster in 2008. He repeatedly reneged on his promises to restore democracy in Pakistan, and remains a controversial figure in the country.

Outside of Pakistan, Musharraf is remembered for his cooperation with the US during the War on Terror years, though later interviews revealed he had secretly supported the Taliban as well.

Musharraf died aged 79 in Dubai and was buried in Pakistan with full military honours on Tuesday (7 January), despite having received a death sentence for treason there in 2019 (the sentence was overturned in 2020).

👀 EXTRA INTRIGUE

Sports and global politics don’t mix well, but they do mix often. English football club Manchester City, which is majority owned by the ruling family of the UAE, was recently charged by the Premier League with more than 100 financial violations. Here’s what we’re reading:

• Inside Manchester City on a remarkable day that nobody at the club saw coming ($)
• If Manchester City are guilty they have betrayed football as a spectacle
• Relegate Man City
• Manchester City May Fall, but Soccer’s Billionaire Era Lives On

🗳️ POLL TIME!

Share Intrigue with your friends, friends of friends, colleagues, enemies… whoever you see fit. The more we grow, the more we can offer you. We’re challenging ourselves with more ambitious goals than ever in 2023. Help us make them a reality. 👇

Yesterday’s poll: Does Hong Kong still have a future as a financial hub?

🟨⬜️⬜️⬜️⬜️⬜️ 👍 Yes, it still has a strong economy and companies are comfortable there (25%)

🟩🟩🟩🟩🟩🟩 👎 No, there are plenty of safer options in the region (75%)

Your two cents: 

• 👍 S.B: “I’m from Hong Kong and business interests will be protected above all other costs”.
• 👎 H: “HK as a strategy to do business in mainland China no longer makes sense – make your mainland base in Shanghai or another booming port city, then base in Singapore for the rest of Asia Pacific”.