Jul 23, 2020

Axios World

By Dave Lawler
Dave Lawler

Welcome back to Axios World. I hope you’re reading this with a nice week behind you and an even better weekend ahead.

  • We’re starting on the Nile tonight and flowing through U.S.-China tensions. Final destination: South Korea (1,670 words, 6 minutes).
  • We’re about to hit a big subscriber milestone, so keep telling your friends and colleagues to sign up here — and thanks so much for reading!
1 big thing: New phase in Nile showdown

The Blue Nile as it passes through the dam. Photo: Eduardo Soteras/AFP via Getty

Ethiopia has crossed a critical threshold after years of tensions with Egypt and Sudan, by completing the initial filling of its massive Grand Ethiopian Renaissance Dam.

Why it matters: Egypt and Sudan had warned Ethiopia not to proceed without a deal ensuring their access to the Nile’s waters, on which Egypt in particular is almost entirely reliant.

Driving the news: Ethiopian Prime Minister Abiy Ahmed was both triumphant and conciliatory, declaring Ethiopia had shown the world it can “stand firm with its two legs,” while adding that a “breakthrough agreement” with Egypt and Sudan was growing closer.

  • Egypt seems less confident on that second point. It has repeatedly accused Ethiopia — which holds most of the cards as the upstream country — of scuppering negotiations.
  • The Trump administration seems to agree, particularly since Ethiopia rejected an agreement it drafted in February. According to Foreign Policy, the U.S. is considering aid cuts to Ethiopia if talks stall again.

Where things stand: Fears that the first filling would become a flashpoint are lessening, as both sides have recommitted to African Union-led talks.

  • Ethiopia has only impounded a relatively small amount of water — enough to test two turbines — and will take at least five years to fill the dam’s enormous reservoir (that duration is a source of intense disagreement).
  • Still, every milestone in this multiyear process carries the risk of a flare-up, and crucial issues — particularly around Ethiopia’s commitments during droughts — remain unresolved.

From Ethiopia’s perspective, the dam is both a source of national pride and a statement that it doesn't need anyone's permission to harness the Nile, says William Davison, an International Crisis Group analyst in Ethiopia.

  • “The dam is about the only thing that all Ethiopians agree on, so [Abiy] wouldn’t want to be seen as conceding on the filling of the dam in any way. It’s actually probably in his favor to be seen as standing up to Egypt and Sudan,” adds Mirette Mabrouk, the director of the Middle East Institute’s Egypt program.

Egyptian President Abdel Fattah el-Sisi, meanwhile, has called the dam dispute a “matter of life or death.”

  • Some voices in Cairo have occasionally warned of war, though the government insists it’s committed to negotiations.
  • “Armed conflict is sort of option Z-squared on everyone’s list. Nobody, nobody, nobody wants to go to war on this," Mabrouk says.
  • "The thing is, at some point, if Egypt is going to have 110 million people and no water, that changes the construct slightly."

Sudan is caught in the middle. It’s worried about its own water supply and the potential for catastrophic flooding should the dam fail, but it's eager to tap a cheap new source of electricity.

What to watch: “We are past a point in this long, drawn-out process when tensions threatened to deteriorate. And instead, we are back in that long, drawn-out process,” Davison says.

  • Nearly a decade of such negotiations has come and gone. While Abiy claims to be nearing a breakthrough, it’s unclear what happens in the event of another breakdown.
2. U.S.-China tensions: "Distrust and verify"

Illustration: Sarah Grillo/Axios

Secretary of State Mike Pompeo aimed directly for Xi Jinping in a speech tonight, calling the Chinese leader "a true believer in a bankrupt totalitarian ideology" and a would-be global hegemon.

The backstory: Pompeo's was the last in a quartet of speeches from top Trump administration officials laying out what they portray as a battle for the survival of the free world against Beijing and its enablers — including more dovish allies and major U.S. companies.

Pompeo spoke at the Nixon Library, symbolically slamming the door on five decades of U.S. engagement with China that began with Nixon.

Excerpts:

  • “If we want to have a free 21st century — and not the Chinese century of which Xi Jinping dreams — the whole paradigm of blind engagement with China simply won’t get it done."
  • “We must induce China to change in more creative and assertive ways because Beijing’s actions threaten our people and our prosperity.”
  • "General Secretary Xi is not destined to tyrannize inside and outside China forever unless we allow it."
  • “We’re all still wearing masks and watching the body count rise because the [Chinese Communist Party] failed in its promises to the world."

My thought bubble: There's something discordant about this rhetorical onslaught from the administration, given we're months away from an election and the president's attention is elsewhere (as Pompeo was wrapping up, Trump canceled the Jacksonville convention).

  • Historians of the future may ultimately pay the speeches more heed than most media today.
3. Part II: Compound fracture

Illustration: Sarah Grillo/Axios

Outside one Chinese consulate, in Houston, confidential files burned. Another, in San Francisco, is allegedly sheltering a fugitive.

Driving the news: The FBI claims a researcher at UC Davis, Tang Juan, lied about her links to China's military when she applied for a visa. After agents interviewed her on June 20, the bureau says, she entered the consulate in San Francisco and hasn't left, Axios' Bethany Allen-Ebrahimian scoops.

  • "Sheltering a defendant in a criminal case by using the diplomatic immunity of a consular building, if true, is really extraordinary," said Minyao Wang, a New York-based lawyer who has worked on IP theft cases related to China.
  • Tang's case appears to be part of a pattern of China sending "military scientists to the United States on false pretenses," per court filings.

As for the Houston consulate, the U.S. told China on Tuesday that it must close within 72 hours.

  • No detailed explanation was given, but Sen. Marco Rubio referred to the consulate as the “central node of the Communist Party’s vast network of spies & influence operations in the United States."
  • China has vowed to retaliate.

My thought bubble: This reminds me of a storyline from the Obama-Trump transition, when Trump considered giving back a recently confiscated retreat used by Russian spies. My colleagues and I drove out to Maryland to check it out. Video.

Bonus: Clock is Tik-ing

Illustration: Aïda Amer/Axios

TikTok was banned in India on security grounds and is on its “final warning” in Pakistan for failing to “control obscenity, vulgarity and immorality.”

  • A looming ban in the U.S. could be an even heavier blow to the social media sensation, part of Chinese company ByteDance.
  • Some of ByteDance’s U.S. investors are in talks to buy all or part of TikTok to try to prevent that from happening. Go deeper.

Go deeper:

4. State of the outbreak

Drive through testing in Kigali. Photo: Cyril Ndegeya/Xinhua via Getty

The world has just topped 15 million recorded cases of COVID-19, with the U.S., Brazil and India continuing to record the highest daily totals.

  • Brazil set a new record for infections yesterday with 67,860. The WHO had only recently said its outbreak appeared to be leveling off.
  • India also set a record yesterday with 45,599 cases, while rising daily death tolls have put it in the unenviable company of the U.S., Brazil and Mexico.
  • “At least nine countries are reporting test positivity greater than 20%, considerably higher than the WHO recommendation of 5%,” per Johns Hopkins. “Six are located in the Americas: Argentina, Bolivia, Colombia, Costa Rica, Mexico and Panama.” The others are Bangladesh, Oman and South Africa.

Snapshots:

  • Japan launched its "Go To Travel" campaign of subsidies to promote domestic tourism today despite record high case numbers. There are deep fears a spike in travel will spread the outbreak around the country.
  • Pakistan has managed to bend its curve, but officials fear large gatherings to celebrate Eid al-Adha next week could undermine that progress, per the Washington Post.
  • Rwandans are being stopped on the street and offered free, immediate testing (some say "refusal is frowned upon,” per NPR). The results are processed relatively quickly through facilities and strategies developed to fight AIDS.
5. European Union: How the sausage got made

Illustration: Aïda Amer/Axios

It took five days, painful compromises and wrangling from German Chancellor Angela Merkel, but the European Union struck a massive spending deal on Tuesday.

The latest: It has both a COVID-19 recovery package (worth $868 billion) and a seven-year budget ($1.24 trillion). It's now over to the European Parliament for approval.

Two major divides — one running north and south, the other east and west — had threatened to derail it

The first pitted the Netherlands, Austria, Sweden and Denmark against hard-hit southern counterparts, particularly Spain and Italy, over how the recovery funds would be dispersed.

  • A landmark proposal from Merkel and French President Emmanuel Macron — €500 billion in grants, financed by common debt — sent shivers down the spines of the "frugal four."
  • The final mix includes €390 billion in grants, though the Netherlands did secure an "emergency brake" that will allow countries to hold up some spending.

The second split was over plans to tie budgetary outlays to rule-of-law protections.

  • The governments of Hungary and Poland, notorious in Brussels for trampling judicial independence, unsurprisingly dissented.
  • They won the day. Other leaders wanted a deal more than they wanted this fight.

The big picture: This may not be the EU's "Hamilton moment," but it is, as Macron and several other leaders put it, "a historic day for Europe."

  • The EU and Merkel have come a long way from the cautious, divisive response to the eurozone crisis a decade ago — and even from the early days of the pandemic, when Italy felt abandoned and Germany was accused of hoarding PPE.
  • Despite sporadic upsurges that have forced whack-a-mole lockdowns, most countries have also been successful in bringing their outbreaks under control and keeping them there — remarkably so when compared to the U.S.
6. What I'm reading: The Republic of Samsung

Lee Jae-yong, the heir to the Samsung throne, arrives in court on bribery charges in 2017. Photo: Chung Sung-Jun/Getty Images

In his book "Samsung Rising," Geoffrey Cain portrays a company that is almost synonymous with its home country and so central to the economy that the failure of a single product — the combustible Galaxy Note 7 — led to fears of a nationwide downturn.

The big picture: Samsung and South Korea developed together. In order to keep control of his company, founder Lee Byung-chul agreed in 1961 to align his plans with military dictator Park Chung-hee's ambitions for national development.

  • Such arrangements allowed South Korea's "chaebol" — family-run conglomerates — to dominate the economy.
  • Bribes and favors greased the wheels along the way, Cain details, leading to a series of scandals that have ultimately served to underline Samsung's privileged status.
  • Cain's most provocative move is to compare the "Republic of Samsung" to the North Korean regime for the deification of its ruling family, militaristic structure and indoctrination of new recruits.

The book is ultimately a story of astonishing progress amid a reluctance to change.

  • So too is South Korea's, which remains more conservative than the high-tech image, powered in part by Samsung, might suggest. 
7. Stories we're watching

Vila Formosa Cemetery, on the outskirts of São Paulo, Brazil. Photo: Fernando Marron/AFP via Getty.

  1. World coronavirus updates
  2. Report: U.K. ignored Russian interference for years
  3. Trump-Putin call today
  4. Europe's clean power inflection point
  5. Hong Kong protestors adapt to defy new law
  6. Big shirtmaker blacklisted over Xinjiang ties
  7. Tokyo Olympics not possible "if situation continues"

Quoted:

"Everyone should watch the 2005 film 'Earthlings.'"
— Ukrainian President Volodymyr Zelensky, complying with a demand from a gunman who took 10 people hostage but released them after speaking with Zelensky, who agreed to praise the animal rights documentary
Dave Lawler