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Blackwater USA | Daily Brief

China

  • The U.S. and China reached a partial trade deal, but the final agreement will take longer than expected—reportedly because Pres. Trump is letting his posturing ahead of the 2020 election cloud the process (he worries that American consumers will blame him for higher prices that result from the deal).
  • Trump said he and Pres. Xi might sign the final pact on the sidelines of the Asia-Pacific Economic Cooperation meetings in Chile next month.
  • The Economist printed a great article about the fallout from the Houston Rockets GM’s pro-democracy tweet about Hong Kong—whose seven words (“Fight for freedom. Stand with Hong Kong.”) led to a de-facto boycott of the team in China. Article pasted below.

Brexit

  • PM Johnson called Parliament in on a Saturday to rush a decision about his Brexit deal. That’s a big deal: it’s the first time legislators have worked on a Saturday in 40 years—since Argentina invaded the Falkland Islands.
  • Legislators will reportedly be asked to choose between backing Johnson’s deal or delaying Brexit.

DRC

  • A small cargo plane crashed in eastern DRC with two Russian crew, two other crew, and four members of Pres. Tshisekedi’s staff aboard—including his driver, a logistics manager, and some soldiers. All eight are feared dead.
  • The FDA approved the OraQuick Ebola Rapid Antigen Test for sale in the U.S. OraQuick can confirm Ebola infections in symptomatic patients within 30 minutes, and has already been used in DRC via an FDA Emergency Use Authorization.

Syria

  • Turkish media boasted that Turkey has “neutralized” 415 “terrorists” in northern Syria, which is another way to say it killed or captured (probably killed) 415 Kurdish members of the Syrian Democratic Forces (SDF). It also “liberated” (alternatively, “captured”) Ras al Ayn, a key border town, from the SDF.
  • According to Long War Journal, two IS sleeper cells targeted separate SDF positions in Raqqa and Tabqa, Syria.

Venezuela

  • Guatemalan President-Elect Alejandro Giammattei landed in Caracas for meetings with Pres. Guaido, but Pres. Maduro’s airport goons denied his entry into Venezuela, and earned Maduro an enemy. Giammattei posted a tribute to Guaido, in lieu of their meeting: “This is a message for president Guaido: we are with you. Even though they have not let us enter, we will make our voice heard today across the whole continent.”
  • Ecuador is accusing Venezuela of stirring unrest—though it was Ecuador’s decision to remove fuel subsidies that triggered the ongoing protests.

Iran

  • This Iranian tanker attack story is pretty bizarre. Saudi’s coast guard claimed that it had received and responded to an e-mailed distress call from the Sabiti tanker, but heard nothing back from the vessel—which then continued to move away from the responders in Jeddah, heading for Iran at full speed, and even turned its tracking system off.
  • No independent sources have confirmed Iranian media’s reports about it, and Iran’s reports were tainted by contradictions, negations, and old photos of unrelated incidents. Iran’s allies and enemies alike are avoiding comment—which still seems surprisingly responsible, given their recent rhetorical belligerence.
  • (That said, the U.S. just said it would send 1,800 troops to Saudi Arabia to counter Iran—though that’s been in the works for a while, and may not have anything to do with Iran’s claimed escalation.)
  • Pakistani PM Khan is scheduled to fly to Tehran either today or tomorrow, and there’s speculation that he’s going there to try to mediate between Iran and Saudi Arabia—at the request of the U.S.

RSS

  • The U.S. used the Magnitsky Act to sanction two South Sudanese businessmen for allegedly exploiting government coffers for personal gain, and perpetuating the country’s civil war as a result. I’m not sure if the new sanctions have anything to do with recent Sentry report on corruption in RSS that George Clooney and John Prendergast have been publicizing—perhaps.

Mining & Minerals

  • Guinea and Liberia signed a deal that will allow mines in remote parts of Guinea—including the enormous Nimba Iron Ore Project—to export minerals through Liberia, which will be easier than building a highway or rail system to the coast in Guinea. The deal technically only applies to the first 5 million tons produced, but it leaves open the possibility of extension—if that seems more economical than sending output 650 km by train to a Guinean port.
  • Chinese mining company MMG said it will likely be forced to stop production at its Las Bambas copper mine in Peru this week, as a result of protests that have blocked supply routes to the site.

Other News

  • Typhoon Hagibis is inundating Japan, and may force the cancellation of this weekend’s F1 Grand Prix.

Alley-oops: How not to do business in China (Economist)

The Communist Party posterises the NBA

Somehow daryl morey must not have been fully briefed on the most-followed but least-discussed rule of doing business in China: do not say anything that might reflect negatively on the Communist Party. On the morning of October 5th in Tokyo, Mr Morey, the general manager of the Houston Rockets, a National Basketball Association (nba) team heretofore loved by millions of Chinese fans, ignited a furore in China by tweeting a seven-word message in support of protesters in Hong Kong: “Fight for freedom”, he wrote. “Stand with Hong Kong.” In response to the tweet, which Mr Morey would later delete, the Communist Party showed its willingness to use market power to constrain speech beyond China’s borders—which in turn is hardening resistance in America to China’s influence.

Chinese nationalists circulated the image from Twitter (which is blocked in China) on Chinese social media, and angrily asserted that Mr Morey was challenging China’s sovereignty over Hong Kong. China’s consulate in Houston issued a statement that China was “deeply shocked” and urged the Rockets to “correct the error”. The Chinese Basketball Association—chaired by Yao Ming, China’s greatest player and a former Rocket (helping explain the massive popularity of the team in China)—declared its “strong opposition” to Mr Morey’s tweet and said it would stop working with the Rockets.

cctv, the state broadcaster, and Tencent, an internet conglomerate that streams nba games, announced they would not show Rockets games. Sponsors cut ties with the team. E-commerce sites stopped selling Rockets kit. The official nba store in Beijing, the largest outside North America, was instructed by the authorities to remove all Rockets merchandise from the shelves, according to a salesman there (with the exception of Yao Ming jerseys). People’s Daily, the party’s mouthpiece, accused Mr Morey of being “pro-separatist”. The controlling owner of the Brooklyn Nets, Joe Tsai, a Taiwan-born billionaire who made his fortune at Alibaba, a Chinese e-commerce giant, published an open letter suggesting boundaries for acceptable speech about China. He implied that Mr Morey had endorsed a “separatist movement” in Hong Kong, which Mr Tsai called a “third-rail” issue. All “1.4bn Chinese citizens stand united when it comes to the territorial integrity of China”, Mr Tsai wrote. “This issue is non-negotiable.”

China is by far the nba’s most important international market, with as many as 500m people watching at least one nba game last season. nba executives and players quickly tried to react as many businesses with a big China audience have done in the past, by distancing themselves from the perceived offence. Tilman Fertitta, the owner of the Rockets, said that Mr Morey did not speak for the team. Backtracking, Mr Morey later said that he “was merely voicing one thought, based on one interpretation, of one complicated event”. James Harden, the Rockets’ superstar, whose popularity in China increases the value of his endorsement deals, apologised in a television interview. “We love China,” he said. The nba issued a statement that it was “regrettable” that Mr Morey had “deeply offended” the league’s fans in China. A Chinese version of the nba’s statement went further, saying the league was “extremely disappointed” by Mr Morey’s “inappropriate remarks”.

Self-censoring to make money in China is a long-standing business practice. The most obvious example is Hollywood, where studios steer clear of any topics in their films that would upset Chinese authorities, so that they can maintain access to the world’s second-largest market. But virtually all foreign businesses operating in China have long self-censored in a more subtle, pernicious way, by never speaking publicly about any issue the Communist Party deems off-limits. Business leaders know they are expected to keep silent about the internment of as many as 1m Uighurs in Xinjiang (where the nba operates a training academy, opened in 2016).

The Morey episode shows it is getting trickier for businesses to navigate between expectations in America, where outcry is growing over China’s authoritarian tactics, and the ever-tougher demands of China under Xi Jinping. Adam Silver, the nba’s commissioner, having taken flak over the nba’s spineless initial response, clarified his support for free speech, saying “the nba will not put itself in a position of regulating what players, employees and team owners say.” That may be true for the nba, which has a tradition of supporting free speech for its stars. It also still earns most of its money in America. But China’s fierce reaction to Mr Morey’s tweet is certain to induce more self-censorship by executives in the future. And when they choose not to speak at all, few will take note.