Tuesday, January 9
MOON’S GREAT LEAP
Two Koreas meet for the first time in two years
Today, delegations from both Koreas will meet to discuss North Korea sending athletes to next month’s Winter Olympics in PyeongChang, South Korea.
The first governmental meeting between the neighbours in two years represents a breakthrough for Seoul, where President Moon Jae-in has been pressing for de-escalation since he came to power last May. A phone hotline between the two countries has also been restored.
While some, like US Secretary of State Rex Tillerson, are hopeful that the meeting will serve as a stepping stone to denuclearisation negotiations, others believe that the meeting will merely buy Kim Jong-un time to further develop weapons capabilities.
The meeting won’t address Pyongyang’s nuclear program but represents a win for Mr Moon’s sunshine policy approach. Seoul must next convince Washington that the Moon approach is worthwhile; last week’s agreement to postpone military exercises until after the Olympics represents progress on this front. Without US support, South Korea’s progressive president risks another “appeasement” rift with Mr Trump, a wedge that would suit Mr Kim’s interests.
GOING DEEP
Poland’s cabinet reshuffle could help soothe EU rupture
Poland’s new PM will announce a cabinet reshuffle at 1100 GMT today. The move comes exactly two months after the right-wing PiS government replaced PM Beata Szydlo with then-Finance Minister Mateusz Morawiecki.
Less than two years away from an election, Poland’s ultra-conservative government enjoys record support among voters, despite controversial reforms that challenge judicial independence and media plurality.
Brussels has reacted angrily to these measures, which it says threatens the rule of law in Poland. Last month, the European Commission began infringement proceedings under Article 7 of the EU Treaty to suspend Poland’s voting right in European decision-making bodies.
Interestingly, Mr Morawiecki will travel directly to Brussels for talks with Commission President Jean-Claude Juncker following today’s announcement.
Indeed, some changes may well help freeze the unfolding dispute. Current Environment Minister Jan Szyszko has clashed with Brussels over an increase in logging of the protected Bialowieza forest, sparking legal action by the bloc. His replacement with a more EU-friendly minister would build confidence ahead of important negotiations over Poland’s future in the EU.
SHAKE UP
Angola to partially float currency as reform effort takes hold
The first auction of the kwanza will be held today, days after authorities announced that Angola would abandon a US dollar peg. The kwanza is expected to depreciate by 20% to 30% but will be contained within an undefined trading band by the central bank.
Hit by lower oil prices, Angola’s economy has almost flat-lined in recent years. While growth is expected to rebound to 2.2% in 2018, structural reforms would attract foreign investment and boost private sector activity.
A partial float of the currency is one such reform. The government’s efforts to keep the kwanza’s US dollar peg have cost it a fifth of its foreign-exchange reserves over the past year, with resultant shortages hurting the private sector.
Today’s currency sale a sign that things are moving fast in Angola, which experienced its first power transition in 38 years last August. Newly installed President Joao Lourenco Lourenco has vowed to fight corruption, dismantle monopolies and open up Sub-Saharan Africa’s third-largest economy.
While welcomed by investors, dismantling monopolies would put the new president in conflict with his former boss, long-time leader Jose Eduardo Dos Santos, whose family and cronies control much of the economy. One future trigger point could be the all-important oil industry, which provides three quarters of government revenue and 90% of exports but is dominated by Dos Santos’ daughter.