TAIWAN — PSY-OPS AND SELF-FULFILLING PROPHECIES This week's military exercises are designed to intimidate. "There is certainly in the design and location of the exercise an ambition to psychologically coerce the Taiwanese into thinking that resistance is indeed futile," Alessio Patalano of King's College London's war studies department told Global Insider. And then there are ultranationalists to please at home: the crowd that wanted the PLA to shoot down House Speaker Nancy Pelosi's plane or at least interfere with it. This psychological warfare is having other effects: Western companies and governments are having their own crises of confidence. There's two case studies this week.
- Multinational firms are drawing up plans to leave Taiwan: "I have seven fortune 500 companies asking me to pre-plan and build an outline of triggers for them to start moving people, infrastructure, and assets," Dale Buckner, chief executive officer of security firm Global Guardian, told my colleague Phelim Kine . "They don't want to happen what just happened in Russia, where they lost billions of dollars' worth of assets, both financial and hard, so they are already looking to disperse people and assets."
- CHIPS Acts in the U.S. and EU: $52 billion in subsidies on the American side and $32 billion on the European side are designed to bring chip manufacturing onshore. Inevitably, that means both powers want to rely less on chips manufactured in Taiwan. That can be good politicking, even good supply chain management. But it's also music to Beijing's ears.
SOUTH KOREA SNUBS PELOSI: Newly ensconced President Yoon Suk-Yeol chose not to meet in person with Pelosi Thursday during her visit to the peninsula — opting for a phone call. Yoon did so after a late night out Wednesday at a Seoul theater followed by a dinner with actors. Yoon's supporters frame it as a vacation, analysts are calling it a snub. UKRAINE — WHO'S DELIVERING ON THEIR PROMISES? The U.S. has delivered more arms than anyone else in absolute terms, but only 38 percent of what it has promised. Poland and Latvia have perfect records, while Estonia and Norway are also above 90 percent, per the Kiel Institute for the World Economy. Countries near the bottom of the rankings include Greece, Spain and France. U.K. — LATEST ON THE RACE TO REPLACE BORIS: Voting opened this week among Conservative Party members to decide who will replace Boris Johnson as party leader and therefore U.K. Prime Minister. Liz Truss is only five percentage points ahead of Rishi Sunak, new private polling suggests . That is significantly less than the roughly 20-point lead she was thought to have ahead of voting. Voting closes Sept. 4. Who are the Conservative Party members deciding Britain's next P.M.? Seven in 10 are men, and 6 in 10 are over 55. Three in 4 voted to leave the EU, and 97 percent are white. YEMEN — CEASEFIRE EXTENDED FOR ANOTHER TWO MONTHS: The U.N.-mediated truce between Houthi rebels and the Saudi-backed coalition has held up for four months already. That's improved the humanitarian situation, more than halving the number of civilian casualties in the conflict , to under 100 per month. ECONOMY — IT'S LOOKING MESSY IN EUROPE: U.K.: The Bank of England is predicting inflation will hit a whopping 13 percent in 2022 (up from 9.4 percent today) and warning of a looming recession. The poorest 20 percent of the U.K. population are facing the highest rate of inflation, and are among the most badly affected of all groups in the OECD. Germany: Watch out for a 2009-level recession if Russia completely cuts off natural gas supply . Germany is at least on track to have its gas reserves 80 percent full by winter ( the goal is 90 percent ). Winter planning: To save energy, the city of Hannover is ready to switch off hot water and shut down fountains. Berlin will stop lighting up 200 tourist sites, and in Munich it will be illegal to heat buildings beyond 19 degrees (68 degrees) . The nuclear option: Germany could safely keep open, or reopen, three recently closed nuclear power plants . It's keeping them closed for political reasons, not safety reasons. DEBATE — SPAIN'S NEW AC RULES: Spain's government announced it would ban certain venues from setting air conditioning below 27°C (80°F ) — including all public and commercial buildings such as bars, cinemas, theaters, airports and train stations. The decree will also stop heating from being raised above 19°C (66°F) during the winter. Households are not required to follow these rules, but the government "recommends" that they do so. What do you think? Let me know: rheath@politico.com WHAT'S THE EXCHANGE RATE FOR AN MBS FIST BUMP? After President Joe Biden's full-court press in the Middle East last month, OPEC+ ministers agreed to raise their oil output by only 100,000 barrels a day, a tiny 0.1 percent of global demand. Guess that's the going rate for a fist bump rather than a handshake. BY THE NUMBERS — FOSSIL FUELS OIL MAJORS RAKING IN CASH: Oil majors BP, Chevron, Exxon, Total and Shell reported combined record profits of $59 billion in Q2 2022, despite output being lower than in 2019 . The companies typically doubled or tripled their profits. RUSSIAN COMPANIES NOW LOSING REVENUE: After riding the wave of massively spiking energy prices around the invasion of Ukraine, Russian energy companies and the Russian state are now feeling the pinch. Prices are down and tax revenues are plummeting (partly due to Moscow's decision to cut gas flows to Europe). CLIMATE CORNER INNOVATING OUR WAY TO CLIMATE PROTECTION: Amazon's emissions keep growing ( by 18 percent in 2021 ), despite the company's commitment to be carbon neutral by 2040. That's because the company growth rate (21 percent) far outstrips its carbon efficiency gains (around 2 percent). Context: Microsoft's emissions jumped 21.5 percent in 2020-21. Overall point: While companies such as Amazon can point to real achievements — "last year, we reached 85 percent renewable energy across our business" — it's going to take some other form of innovation to actually get to net zero. COP27 — GOVERNMENT MOVES INDIA: New Delhi has upgraded its carbon intensity goals — the government will now work to cut emissions intensity by 45 percent by 2030 (up from 35 percent), and aims for 50 percent of energy from non-fossil fuel sources by 2030 (up from 40 percent). The country's 2070 net-zero target remains in place. CHINA: The China Renewable Energy Engineering Institute estimates China will increase its solar and wind installations by 25 percent in 2022 , keeping the country on track for its 2030 1,200GW clean power goal. WATCH FOR: Mexico, Indonesia, Argentina and Turkey to update their targets in coming weeks. h/t COP watcher Ed King EGYPTIAN HOSPITALITY: The COP27 hosts confirmed a " World Leaders Summit " on Nov. 7-8, at the beginning of the two-week COP meeting. Don't hold your breath: We're unlikely to see Xi Jinping, Vladimir Putin and Biden taking strolls around the Red Sea together — but you can expect fights about the role of natural gas in the global energy mix. FOOD SECURITY — LACK OF RAIN IN INDIA POSES NEW THREAT: India's total rice planted area is down 13 percent this season due to a lack of rainfall, including West Bengal and Uttar Pradesh, which account for a quarter of the output.
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