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Thursday, December 8


Thursday, December 8

A major shift in Syria

The ECB deliberates more stimulus

US and Indian defence ministers meet



What a possible rump Syria could look like. Click to enlarge

The Syrian government is on the verge of a major victory in Aleppo. On Wednesday, regime forces pushed rebels out of the Old City, their last key stronghold.

Assad has seized two-thirds of rebel-held territory in Aleppo over the past two weeks, possibly marking the most important victory of the entire war. The key question is, what next?

One plausible scenario is that the regime retakes Aleppo and consolidates its control over the rest of western Syria, which contains the largest cities and industrial centres, as well as access to the sea. With his grip over rump Syria secure, Mr Assad will enter negotiations in 2017 – a year in which a deal-hungry Donald Trump assumes office, and France, Germany and the UK become even more distracted by migrant-related domestic issues and elections (from which Syria cannot reasonably be separated).

The convergence of Western interests in ending the war, combined with the regime’s battlefield victories, means Assad may well achieve overall victory (or some version of it) relatively soon.


Photo: Bloomberg
Photo: Bloomberg

Thursday marks the regular, six-weekly meeting of the European Central Bank (ECB). The Bank will evaluate whether its $1.8 trillion bond-buying program needs to be extended to reach its 2% inflation goal. Economists are predicting a six-month extension of the bond-buying program at $86 billion a month.

Italy’s resistance to structural reform in Sunday’s referendum means the ECB may have to shoulder the burden of the country’s struggling banks and stagnating productivity. The central bank may temporarily favour buying government bonds from the Eurozone’s third-largest economy to temper post-vote market volatility.

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Some Governing Council members are now said to favour allocating bond purchases in line with a nation’s outstanding debt, rather than its economy. This favours highly leveraged governments such as Italy, the bloc’s second-largest debtor.

With uncertainty looming over upcoming elections amid popular anti-EU parties in Germany, France and the Netherlands, the ECB will be eager to maintain market confidence. But by staving off the economic effects of rising populism and anti-globalisation, its political independence may come into question.


Photo: AP
Photo: AP

On Thursday, US Defence Secretary Ash Carter will meet his Indian counterpart, Manohar Parrikar, to discuss weapons procurement and the implementation of a military logistics agreement. The overseas visit is likely to be Carter’s last and a chance to take stock of an increasingly important regional relationship.

Of particular interest to the Indian defence establishment is the Predator B Guardian, a US-manufactured, long-range maritime surveillance drone. New Delhi wants to deploy this aircraft over the Indian Ocean, where both it and Washington share a strategic interest in facing down China’s increasing activity.

In August, the two defence ministers signed a military logistics agreement, creating a framework for increased cooperation on resupply and repair missions – a big step forward for the once troubled relationship. However, implementation of the deal has been slow, and the imminent White House transition may further impede momentum. Despite this, as the strategic landscape in Asia changes rapidly, both parties find themselves drawing ever nearer.

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