Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Almaty Russia

Written by Maria Julia Pieraccioni, associate
Edited by Tom Gillingham, associate partner

10 January 2022 

Good morning,

These days, Russia is booked and busy. The country has spent much of last year mobilising an army near the border with Ukraine, amassing a force which some estimate totals 100,000 troops. On 17 December, president Putin demanded bilateral treaties with both the United States and NATO, essentially a cease and desist order that would allow for the creation of a “semi-formal Russian spere of influence in eastern Europe, the Caucasus and Central Asia”, according to analysis by The Economist. With the NATO-Ukraine Commission and the NATO-Russia Council occupied in Belgium today, Putin’s ambitions are playing out in real time in another former Soviet country: Kazakhstan.
 
On 2 January, as the rest of the world was busy making New Year’s resolutions and dealing with holiday leftovers, fuel riots over rising oil prices broke out in Almaty, Kazakhstan’s commercial capital. These riots have grown to become a broader revolt against the government, and recent figures show that at least 164 people have died and 6,000 have been injured after President Kassym-Jomart Tokayev told security forces to “fire without warning” on rioters who stormed government buildings in Almaty.
 
Kazakhstan has vast mineral resources, boasting 3% of global oil reserves in addition to significant coal and gas resources. It seems hard to comprehend how the fluctuation of oil prices might be to blame for the deaths of 164 people and the storming of government buildings in what is otherwise a peaceful country.
 
The seed of discontent in this former-Soviet country might actually be attributed to something far more disturbing than petrol costs. Recently, speculation has amassed that the riots were a cover for a power struggle among the country’s ruling elite, after Karim Massimov, Kazahkstan’s former intelligence chief (who was fired by the president last Wednesday) was arrested on suspicion of treason. Allegedly, street protests sparked a struggle between president Tokayev and Massimov and former president Nazarbayev, the country’s first post-Soviet era president and its longest standing. In response, Tokayev called on Collective Security Treaty Organisation (CSTO) to help restore order. Of the many countries in the alliance including Russia, Armenia, Belarus, Kyrgyzstan and Tajikistan, Mother Russia swiftly obliged by sending paratroopers on a “peacekeeping mission”. Tokayev not only called on a powerful ally to qualm a peaceful protest but sent a powerful message by doing so. At home, he went from being a “mealy-mouthed quiet diplomat” to a leader similar to those exemplified in Soviet Russia, using rhetoric closer to that of a “general leading an army”, according to Kate Mallinson, an associate fellow at Chatham House. To the world, he reinvigorated the country’s relationship with Russia.
 
Hence, the plot thickens. Kazakhstan’s past, present and now future are shaped by its ties to, and reliance on, Russia. In turn, entering a domestic conflict in an ex-Soviet, now foreign, country, is evidence of Russia’s existing and evident tentacular reach in central Asia—with or without NATO’s blessing.

News

Free lateral flow tests will be eliminated as part of the upcoming government’s plan for the UK to live with Covid. A senior Whitehall official confirmed to The Times that the new system will see free tests being provided only in high-risk settings such as care homes, hospitals and schools, and people with symptoms. The new plan is expected to save the government up to £6 billion. (£)
 
A new YouGov poll commissioned by Sky News revealed that almost half of Tory members interviewed now believe that Rishi Sunak would be a better leader than Boris Johnson. A third of those surveyed believe Boris Johnson should stand down as Tory leader, and findings concluded a substantial increase in disaffection compared to the early stage of the pandemic.
 
Supermarket Morrisons is scrapping its “use by” date on most of its milk, in a move that will hopefully avoid customers from wasting the product. Instead, the supermarket will be using “best before” and encourage customers to use a “sniff test” to check quality.

Business and economy

Minister for housing Michael Gove has confirmed that developers will be tasked to cover the costs of the removal of dangerous cladding of thousands of buildings. Gove said that the Treasury will provide no additional funding to developers and will resort to legal compulsion if the industry fails to comply. (£)
 
EU ambassador to the UK Joao Vale de Almeida hit out at foreign secretary Liz Truss after she threatened to trigger Article 16 on the Northern Ireland Protocol. De Almeida said that despite her words being “unsurprising”, they are damaging to the negotiations that are set to resume.
 
Starting this week, Citigroup will be terminating unvaccinated workers as part of its “no jab, no job” policy. Citigroup will be the first Wall Street bank to implement a vaccine mandate, which so far has only affected government workers in the US. According to Bloomberg, more than 90% of the bank’s staff has so far complied with the rule.

Columns of note

This week, The Economist explores the dysfunction of the US’ foreign diplomacy, noting that its “relentless” quest for diplomacy is hampered by its lack of diplomatic bases. For instance, the magazine notes that the lack of American ambassadors in any of the Gulf countries hampers nuclear talks with Iran. In another instance, the lack of envoys in India, the Philippines and Thailand leaves a significant gap in the geopolitical countenance of China. The Economist suggests that America’s prolonged diplomatic vacancies abroad “feed the perception of America’s withdrawal, if not decline”. (£)
 
In The Guardian, Will Hutton explores why racism and Islamophobia have begun to shape the last months of the French presidential election. The French right—first with Marine Le Pen and now with TV celebrity Éric Zemmour—has always used inflammatory, anti-immigration and Islamophobic rhetoric to win over the hard-righters. However, Hutton argues that the rise of populism elsewhere in Europe in the last four years has amplified this rhetoric to the detriment of French principles.

Markets

The week ahead

Monday will begin with the release of EU’s eurozone unemployment figures and results from luxury fashion company Brunello Cucinelli. The NATO-Ukraine Commission is also set to meet in Brussels.
 
On Tuesday, the EU will produce its industrial production figures while the UK’s British Retail Consortium will release its monthly retail sales monitor report, which is expected to show growth in the month of December thanks to the holiday season. Investors will also be directing their attention to the World Economic Forum’s highly anticipated Global Risks Report.
 
On Wednesday, China, India, Russia and the US will release updated inflation data, while the Military Committee, the highest military authority of NATO will meet Chiefs of Defence at the NATO headquarters, and separately the NATO-Russia Council will meet to discuss Russian militarisation along Ukraine’s border. Thursday will see Q3 trading updates from Marks and Spencer, Persimmon and Tesco, as well as the UN World Economic Situation and Prospects report for 2022.
 
Friday results will feature Citigroup, JPMorgan Chase, and Wells Fargo.

What’s happening today?

Interim Dividend Payment Date
Intermediate Capital
Caffyns           
3i Infrastructure          
Templeton Emerging Markets

Source: Financial Times

did you know

The first ever speeding ticket was issued in 1896 to a driver in Kent for going four times the legal speed limit.
 
The driver was going the breakneck pace of 8mph. The speed limit was 2mph.
(Source: @qikipedia)

Parliamentary highlights

House of  Commons 

Oral questions
Defence (including Topical Questions)

Legislation
Nuclear Energy (Financing) Bill: Remaining Stages

Motions
Debate on Motions to approve the Charter for Budget Responsibility: Autumns 2021 update and the Welfare Cap as Specified in the Autumn Budget

Adjournment
Discharge of Simon Hinchley-Robson from the RAF in 1986

Westminster Hall Debate
e-petition 548682, relating to police powers to suspend driving licenses

House of Lords 

Oral questions
Various
 
Debate
Procedure and Privileges Committee Report ‘Debates before second reading in Grand Committee; Update on pass-reader voting; Leave of absence’
 
Legislation
Charities Bill – third reading
Advanced Research and Invention Agency Bill – third reading
Police, Crime, Sentencing and Courts Bill – report stage (Day 4)
National Insurance Contributions Bill – committee sage (day 1)

Scottish parliament 

No business scheduled.

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