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Emerging Markets Daily - November 11
US Says Russia Mulling Ukraine Invasion, Lukashenko Threatens Europe Gas Supply, Xi Further Cements Power, Venezuela's SuperApp, EgyptAir Back in Qatar
The Top 5 Stories Shaping Emerging Markets from Global Media - November 11
US Warns EU that Russia Is Mulling Invasion of Ukraine
“The U.S. is raising the alarm with European Union allies that Russia may be weighing a potential invasion of Ukraine as tensions flare between Moscow and the bloc over migrants and energy supplies.”
“With Washington closely monitoring a buildup of Russian forces near the Ukrainian border, U.S. officials have briefed EU counterparts on their concerns over a possible military operation, according to multiple people familiar with the matter.”
“The assessments are believed to be based on information the U.S. hasn’t yet shared with European governments, which would have to happen before any decision is made on a collective response, the people said. They’re backed up by publicly-available evidence, according to officials familiar with the administration’s thinking.”
“Russia says military deployments on its territory are an internal matter and it denies any aggressive intentions, while accusing the U.S. of provocation by sailing warships in the Black Sea close to its territory this week.”
“The U.S. warning over Ukraine comes on top of the more recent standoff between Poland and Belarus, a close Russian ally. And it is playing out amid uncertainty over increased Russian gas supplies to Europe despite Putin’s pledge to ramp up deliveries from this week to ease an energy crunch. He’s pushing for European regulators to give swift approval to operate the Nord Stream 2 gas pipeline from Russia to Germany, a project the U.S. and Ukraine opposed as a security risk.” Bloomberg reports.
Belarus’ Lukashenko Threatens Gas Cut-Off to Europe
“Belarus' President Alexander Lukashenko has threatened to cut off gas transit to Europe through his country by shutting down the Yamal-Europe pipeline if the EU imposes new sanctions on the country.”
“The Yamal-Europe pipeline is part of the northern route that also includes the Nord Stream 1 and 2 pipelines and transits gas from Russia’s Arctic Yamal fields via Belarus to Poland and on to Germany.”
“Currently the Yamal-Europe pipeline is playing a key role in delivering gas to alleviate the European gas crisis as the controversial Nord Stream 2 gas pipeline has not received EU permission to start operating and the Russian state-owned gas giant Gazprom is not sending any more gas than it is required to under the terms of a new transit deal signed in December 2019.”
“Europe is already suffering from an estimated 15bn cubic metre (bcm) gas deficit for this winter’s heating season and any more interruptions in supplies would send prices on the gas spot market soaring again.”
“EU leaders met yesterday and floated the idea of imposing a fifth packet of sanctions on Belarus, which has been bussing thousands of Middle Eastern refugees to the Polish border, who are attempting to cross illegally into the EU. Blocked by some 15,000 Polish border guards and soldiers, the situation in the forest between the two countries is rapidly turning into a humanitarian crisis. The EU foreign ministers are due to meet next week and could vote on new retaliatory sanctions on Minsk…”
“Both Poland and Lithuania have declared a state of emergency this week and closed the border for a month while the refugee crisis continues. Lukashenko went on to single out the Yamal-Europe pipeline for attention. The president noted that the gas pipeline goes through Belarus, and recently Russia has significantly increased the volume of gas transit to the West via the pipeline.” Bne IntelliNews reports.
President Xi Cements Power, Likely to Stay in Power Until At Least 2028
“The Chinese Communist party has passed its first ‘historical resolution’ in 40 years, in a development likely to pave the way for President Xi Jinping to stay in office until at least 2028.”
“The resolution, formally adopted by the party’s central committee at the end of its annual meeting, or plenum, on Thursday, declared that Xi’s leadership was ‘the key to the great rejuvenation of the Chinese nation’, according to a summary published by the official Xinhua news agency.”
“The central committee typically holds one plenum a year, attended by its 370 full and alternate members at a military hotel on the western outskirts of Beijing. This week’s plenum opened on Monday and is particularly significant because it comes just a year before a party congress will appoint a new leadership team to serve until 2027.”
“Communist China’s two most revered leaders, Mao Zedong and Deng Xiaoping, used similar resolutions to secure their grip on power in 1945 and 1981, respectively. By declaring that ‘the great rejuvenation of the Chinese nation has entered an irreversible historical process’ under Xi’s leadership, the party has effectively anointed him as an equal of Mao and Deng, eclipsing his predecessors Hu Jintao and Jiang Zemin.”
“Xi, the plenum said, had ‘resolved many problems that [the party] failed to address for a long time despite intending to do so”’ Hu and Jiang both presided over peaceful and orderly transitions of power, with their successors identified five years in advance.”
“Xi, however, is expected to dispense with this tradition and secure a third five-year term as the party’s general secretary late next year.” The FT reports.
The Rise of Yummy, Venezuela’s Unlikely SuperApp
Rest of World
“When Vicente Zavarce was first starting Yummy, Venezuela’s self-appointed ‘everything app’, he sought out other entrepreneurs in Latin America for advice. One of those was the leadership team at Yaigo, a Bolivian logistics startup, including its co-founder and CEO Ariel Valverde…”
“Now, not two years after that fateful meeting, Yummy announced that it would be acquiring Yaigo as it makes a play for expansion in South America, particularly after entering Chile and Peru. The irony does not escape Zavarce.”
“At first glance, the companies share a similar strategy. Both Yummy and Yaigo got their start in smaller Latin American markets where big regional players like Rappi — and international behemoths like Uber — were hesitant to invest resources.”
“Venezuela’s instability — initially a fundraising roadblock for Yummy — allowed the company to expand rapidly and test out multiple services in the absence of competition. From food delivery and dark kitchens in 2020, Yummy now also offers ridesharing, grocery delivery, and event e-tickets in its mission to become a bonafide super app…”
“By dominating the market at home, Yummy was able to assess which of these offerings was most likely to perform well in other, more competitive markets. Though Yummy started with services like food delivery, which were already very popular in Latin America, it was only when it saw the rapid adoption of its ‘dark supermarkets’ in Venezuela that Zavarce thought it might have a chance of success abroad.”
“The team at Yummy decided ‘dark supermarkets’ would be the way into Chile and Peru, delivering groceries quickly to people’s homes. For that, they needed to find a team with logistical expertise. That’s when Yaigo came to mind.” Vittoria Elliott reports.
Geopolitics of Aviation: EgyptAir Opens Office in Qatar
“Egypt’s national airline opened an office in the Qatari capital yesterday, in a further sign that Egypt-Qatar relations are getting back to normal.”
“EgyptAir inaugurated its Doha office during a conference for airlines in the Arab world. The airline’s chairman, Amr Abu El-Enein, attended the ceremony, as did Akbar Al-Baker, who is CEO of Qatar Airways, the Egyptian state-owned news outlet Al-Ahram reported today.”
“Egypt and Qatar started mending ties in January when Kuwait brokered an end to the Qatar diplomatic crisis. In 2017, Egypt, Saudi Arabia, the United Arab Emirates and Bahrain all severed relations with Qatar, accusing the Gulf state of supporting terrorism, which Qatar has denied.”
“Relations between Egypt and Qatar have gradually resumed to normal since the January agreement. Egyptian President Abdel Fattah al-Sisi and Qatari Emir Sheikh Mohammad bin Abdulrahman Al Thani spoke on the phone in April. In August, Egypt and Qatar reappointed ambassadors to each other’s countries.” Al-Monitor reports.
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