Negotiations Continue Around Conflict in Ukraine
Yesterday saw the US Secretary of State Anthony Blinken and Defence Secretary Lloyd Austin meet Volodymyr Zelensky in Kyiv. This comes after Washington announced that they would provide a further $322m in military aid to Ukraine, in addition to $165m in ammunition. This means that the total level committed by the US now totals $3.7bn since Russia invade Ukraine on 23rd February. While this is a considerable sum, in the interest of context the request for defence spending in the US for FY2023 is set to be $773bn, hence the assistance to Ukraine makes up around 0.5% of this. Nevertheless, Joe Biden is expected to request additional financial assistance to Ukraine sometime this week while the House will be deliberating over a bill from World War two which would streamline the ability for the US to get military materiel over to Ukraine.Today, Blinken and Austin have headed over to Germany with representatives from over 40 countries as they discuss efforts to increase assistance to Ukraine. Most of these countries will be the 30 Nato member states and will include ministers of foreign affairs from these countries. This comes as Germany have agreed to supply Gepard anti-aircraft systems to Kyiv and the UK will send a further 120 armoured vehicles, anti-tank missile launchers and air defence systems, however Zelensky has continually asked for more materiel.Elsewhere today, Vladimir Putin will speak with U.N. Secretary-General Antonio Guterres in Moscow which comes as dialogue between Kyiv and Moscow appears to have stalled. Ukraine is urging the UN to ensure that Russia will respect a humanitarian corridor to evacuate civilians out of Mariupol and hence much of the meeting is expected to focus on this issue.

As Putin meets Guterres, the Kremlin’s losses are evidently mounting with the UK’s Defence Secretary Ben Wallace citing 15,000 Russian troops having been killed thus far. Tensions also appear to be escalating in the Kremlin with Sergei Lavrov stating that weapons heading to Ukraine will “be a legitimate target” for the Russian military and that risks around the prospect of a Third World War are “serious”. Its worth considering how military conflicts can spill over from one country to another when a belligerent force attacks the supply chains of their opponent in another territory. One notable example was the US’ bombing of Loas and Cambodia during the Vietnam war as they attempted to cut off the Ho Chi Minh Trail supply chain. Hence, as negotiations around the world continue today, the very real possibility of further escalations ought not be underestimated.

Bloomberg has more:

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Musk’s Forty-four Billion Dollar Bid
The board of Twitter has agreed unanimously to sell the company to Elon Musk for a sizable $44bn – meaning that the bid will now be presented to shareholders for a vote. This comes after Musk announced earlier in the month that he had a 9.2% passive stake in Twitter – at a cost of $2.9bn – which made him the largest stakeholder and some subsequent efforts were made to attempt to stop Musk going further. However, the world’s richest person’s latest move – and offer of $54.20 per share – is the next step in realising his plan to take Twitter private. In a tweet yesterday evening, Musk stated that “free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity is debated” and Musk has often criticised the company’s policy vis-à-vis free speech. As of the end of 2021, Twitter had 217m daily active users and around $5bn in revenue and Musk is expected to try to increasingly monetise the platform and increase usership.

Business Insider has more:

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Bank of Israel Turn to Renminbi
Yesterday, the Bank of Israel’s Deputy Governor Andrew Abir told Bloomberg that Israel would start holding Chinese renminbi in part of its foreign exchange reserves – in addition to adding the Japanese yen, Australian dollar and Canadian dollar to their balance sheet. Israel will also seek to reduce their holdings of USD and EUR while increasing GBP in the indication that many countries are increasingly looking towards the renminbi as a reserve currency.

More generally, the equivalent value of $11.7 trillion USD is held across the globe in reserve currencies and since the end of the Second World War the USD has assumed the de facto title as the world’s reserve currency. Nevertheless, since the launch of the Euro, the predominance of the USD as a reserve currency has slowly decreased from around 71% of the global share in 1999 to 59% in 2021. Furthermore, in recent years the CCP have sought to further internationalise the renminbi. According to the Report on the Internationalization of RMB in August 2020, The People’s Bank of China continue to advocate growing the renminbi’s share as a currency reserve by addressing convertibility issues and creating pools of offshore liquidity.

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