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Politico: Israeli-Arab alliance becomes more and more likely

The Biden administration is urging Arab nations to team up with Israel to counter Iranian missiles, but continued mistrust and technological differences mean any kind of alliance could be years away.

Officials and experts say a more realistic goal would be for Israel to share some intelligence with Arab states, conduct tabletop exercises together and perhaps even purchase additional compatible weaponry. That’s more attainable than a regional defense shield linking shooters with radars, satellites and other sensors, they say.

“It’s hard enough to get the U.S. Army and U.S. Navy sensors and effectors into a common command-and-control system,” said Tom Karako, director of the Missile Defense Project at the Center for Strategic and International Studies. “It’s even more challenging when you have them coming from multiple countries in multiple languages.”

Still, Biden is expected to discuss the effort when he meets with officials in Israel and Saudi Arabia this week.

The U.S. is in talks with nations in the region about “a truly more cooperative air defense” in the face of the growing threat from Iran, National Security Council spokesperson John Kirby told reporters last week ahead of Biden’s trip.

“There is a growing convergence among nations in the region of concern about [Iran’s] advancing ballistic missile program and their support to terror networks,” Kirby said. Officials are “exploring the idea of being able to kind of integrate all those air defenses together, so that there truly is a more effective coverage to deal with the growing Iranian threat,” he added.

The prospect of Israel and Arab nations working together on air defense is more plausible now than when Vice President Biden visited Israel in 2016.

Back then, Jerusalem had ties with only Egypt and Jordan. But Tehran’s increasingly aggressive actions in the region, coupled with several deals brokered by the Trump administration, have drastically changed the diplomatic landscape.

The Abraham Accords normalized relations between Israel, the United Arab Emirates, Bahrain, Morocco — all big buyers of U.S. weapons systems — as well as Sudan.

In recent years, Tehran and its proxies have carried out dozens of missile and drone attacks on military bases and critical infrastructure in the region, such as the 2019 strikes on oil processing facilities at Abqaiq and Khurais in Saudi Arabia. In March, Yemen’s Iranian-backed Houthis claimed responsibility for a drone attack on Saudi energy facilities.

“The Iranians have pushed them together,” said Karako, referring to increased cooperation between Israel and Arab nations to counter threats from Tehran. “And the difference now is there is some water under the bridge with the Abraham Accords.”

Gulf nations have not yet acknowledged the plan. But a senior Israeli official said the goal of the so-called Middle East Air Defense Initiative is to “build some kind of architecture that integrates regional actors.”

“Whether or not you want to use the word ‘alliance,’ it’s your business but that’s the idea,” the person said on the condition of anonymity to speak freely about a sensitive issue, adding that “there is still a long way to go.”

One of the largest hurdles is the reluctance of countries in the region to share intelligence, experts said. Nations might be more willing to contribute threat information to a “digital backbone” provided by the U.S., but it’s unlikely they would provide real-time threat data, said David Des Roches, an associate professor at the National Defense University in Washington, D.C.

“Would Israelis want to share what defense systems it has around the Damona nuclear site?” Des Roches said. “Nobody wants to show a vulnerability.”

The fact that Israel is willing to participate in an agreement like this is a positive step, he said, but “we’re nowhere near the NATO model where a multinational HQ prioritizes the threat.”

CNBC: The election of the Prime Minister will not affect Britain's foreign policy

The U.K.’s ruling Conservative Party has begun its race to find its next leader, and the country’s next prime minister, with eight candidates now in the running for the top job.

Collage: AP

The candidates all had to win the initial backing of at least 20 of their fellow Conservative lawmakers in order to proceed to the first round of voting which takes place Wednesday.

In order to whittle the number of candidates down to just two, more votes will now take place – beginning Wednesday – with the 358 Conservative MPs asked to choose their favorite candidate to take over the party.

Any candidate receiving less than 30 votes from his or her fellow MPs will be eliminated in the first round of voting. Then in the second round, the candidates with the fewest votes are eliminated. These rounds of voting continue until two candidates remain, which is expected to happen by the end of this week.

When two candidates remain, all the members of the Conservative Party (some 200,000 people) are asked to vote by postal ballot on their favorite candidate.

The winner is expected to be announced on Sept. 5.

The eight candidates include well-known faces, such as former Finance Minister Rishi Sunak — one of the favorites to win — and Foreign Secretary Liz Truss and new Finance Minister Nadhim Zahawi, as well as those with less high-profiles such as Tom Tugendhat, Suella Braverman and Kemi Badenoch.

Former Health Minister Jeremy Hunt is also in the race, as well as Penny Mordaunt, international trade minister, another of the favorites who’s popular with grassroots party activists. Sajid Javid, former health secretary, withdrew from the leadership race on Tuesday.

Tuesday night, the eight candidates had 12 minutes each to try to convince their fellow MPs why they should be the next leader of the party and the country. Several promised to cut taxes and unite the party after the spectacular fall of Boris Johnson, who remains as prime minister but only in a caretaker role while his replacement is found.

Summing up the economic implications of the candidates expected to proceed to at least a second round of voting, Daiwa Capital Markets said that “at the time of writing, former Chancellor Rishi Sunak looked odds-on to make it to the second round. There he is most likely to face a challenger from the populist right wing — most likely Foreign Secretary Liz Truss or Trade Minister Penny Mordaunt.”

The leadership contest has come about after Johnson resigned as party leader last week after months of controversy over his conduct while in office. His government has been plagued by scandals over parties during Covid-19 lockdowns and several party officials have been hit with sleaze allegations.

The final straw for many MPs who had previously supported Johnson, despite his less than conventional style of leadership, was his appointment of a deputy chief whip (responsible for party discipline) who had previous sexual misconduct allegations made against him of which Johnson was aware.

That led to a wave of resignations with ministers and officials saying Johnson no longer commanded their confidence.

Describing Johnson’s departure as a “Bjexit,” Ian Bremmer, president of Eurasia Group, commented this week that “near term, U.K. policy is paralyzed by the caretaker government’s lack of a mandate (whether Johnson-led or under a new temporary prime minister” and that economic, foreign and defense policy are “essentially in stasis until there’s new leadership in the fall.”

“It’s a wide open race for the fall ... but either way, Johnson’s two most important foreign policy initiatives—on Europe and on Ukraine — aren’t going to change. On the former, with Brexit and euroskepticism already firmly in place for the Conservative Party, there’s no lane for a softer Europe policy, even on the contentious Northern Ireland issue, among premiership competitors,” Bremmer noted on Monday.

European leaders, and particularly France’s President Emmanuel Macron, are happy to see the back of Johnson and will have less dysfunctional personal diplomacy with his successor, but the overarching U.K.-EU relationship will remain significantly strained, Bremmer added.

“That leaves plenty of uncertainty domestically— on fiscal easing and corporate tax policy for example. But I don’t see fireworks over who leads the United Kingdom driving much drama outside of old Blighty.”

The Guardian: U.S.-China Struggle for the Pacific Continues

Two Chinese defence attaches have been kicked out by Fijian police from a Pacific Islands Forum meeting at which the US vice-president, Kamala Harris, was giving a virtual address.

The men were sitting in on a session of the forum’s fisheries agency at which Harris announced the step-up of US engagement in the region, believed to be in response to China’s growing influence.

They were sitting with the media contingent, but one was identified as a Chinese embassy official by Lice Movono, a Fijian journalist who is covering the forum for the Guardian.

Two Chinese officials listen to US vice-president Kamala Harris’s virtual address
Photo: William West/AFP/Getty Images

Movono said she “recognised him because I’ve interacted with him at least three times already”, including during the visit of the Chinese foreign minister, Wang Yi, to Suva last month, at which journalists were removed from events and blocked from asking questions.

“He was one of the people that was removing us from places and directing other people to remove us,” she said. “So I went over to him and asked: ‘are you here as a Chinese embassy official or for Xinhua [Chinese news agency], because this is the media space. And he shook his head as if to indicate that he didn’t speak English.”

Movono alerted Fijian protocol officers, who told her to inform Fijian police, who then escorted the two men from the room. They did not answer questions from media.

Diplomatic sources later confirmed that the men were a defence attache and a deputy defence attache from China, and part of the embassy in Fiji.

The incident comes after an intensification of Chinese involvement in the region in the last few months, which is simmering as an undercurrent to the year’s Pacific Islands Forum.

The uptick of tempo of China’s involvement has included China’s signing of a controversial and wide-ranging security pact with Solomon Islands and a marathon tour of the Pacific region by the Chinese foreign minister at which more than 50 agreements were believed to have been signed.

China is not a part of the Pacific Islands Forum, but like the US is a partner country. Partner nations are usually invited to attend a post-forum dialogue meeting, at which they can give presentations, but this year the partner dialogue will not be held during the week of the summit, in order to give Pacific countries some breathing room from the intense geopolitical pressure.

It was believed China would use the post-forum dialogue meeting to reintroduce a new version of the sweeping economic and security deal that it presented to 10 Pacific leaders last month, but which was rejected.

However, Harris was invited to attend the forum virtually, in what is seen as a huge coup for the US and a blow to China, which has been not afforded a similar honour.

The US has made a concerted effort to step up its engagement with the Pacific in light of Chinese interest, including by reopening its embassy in Solomon Islands, which was announced in February, plus a suite of measures announced by Harris on Wednesday.

These measures include two new embassies, the appointment of a special presidential envoy to the Pacific Islands Forum and tripling the amount of money requested from the US Congress for economic development and ocean resilience – up to $60m a year for 10 years – as well as a return of Peace Corps volunteers to Fiji, Tonga, Samoa and Vanuatu.

In her virtual address to Pacific leaders on Wednesday morning, Harris acknowledged the diplomatic void that the US had left in recent years, saying: “We recognise that in recent years, the Pacific islands may not have received the diplomatic attention and support that you deserve. So today I am here to tell you directly: we are going to change that.”

She also appeared to take a swipe at China’s involvement in the Pacific, speaking of “bad actors” in the region.

“At a time when we see bad actors seeking to undermine the rules-based order, we must stand united,” Harris said. “In this region and around the world, the United States believes it is important to strengthen the international rules-based order – to defend it, to promote it and to build on it.

“These international rules and norms have brought peace and stability to the Pacific for more than 75 years – principles that importantly state that the sovereignty and territorial integrity of all states must be respected; principles that allow all states, big and small, to conduct their affairs free from aggression or coercion.”

Reuters: Rising prices curb consumers' taste for chocolate

Consumers are cutting back on chocolate due to the cost of living crises in Europe and the United States, according to new data and comments from executives at the world's biggest chocolate companies.

Overall U.S. chocolate retail sales volumes have been "off and down" 2% to 3% over the last couple of months as prices have risen in the "high single-digit, low double-digit" range, said Hershey Co (HSY.N) vice president of investor relations Melissa Poole in an interview with Reuters.

"We are expecting that as we move through the year... we will see a bit of pull-back in volume," Poole said. Hershey has previously flagged that it expected a softening in demand. Until the recent dip, "consumers haven't really reduced consumption much at all," she said.

Chocolate sales, particularly in the United States, ballooned along with purchases of many consumer products in the later stages of the coronavirus pandemic, with shoppers buoyed by government stimulus payments and sticking with "homebody lifestyle" habits such as buying in bulk.

But chocolate companies are now seeing some consumer behavior change - for instance, shoppers choosing individual candy bars at the register instead of multipacks.

According to Chicago-based market researcher IRI, the volume sold of chocolate products in the United States dropped 1.5% versus a year ago in the 13-weeks ended June 12 as prices soared 8.2%.

"We're going to see chocolate becoming more sensitive to price. Consumers will treat themselves, but it will be smaller sizes, a small treat. That's why you're seeing (a sales) volume decline," said Daniel Sadler, a principal at IRI.

IRI data also showed sales volumes of U.S. store-brand or "private-label" chocolate, a minor part of the overall market that is cheaper than name-brand chocolate, grew by 8% in the last six months.

Cheaper chocolate has a lower cocoa content, meaning even if chocolate makers' sales volumes stay the same in a downturn, cocoa demand would fall.

The Russian invasion of Ukraine has also impacted demand, traders and experts say, with the two countries together accounting for 5% of usual global cocoa demand.

Chocolate makers originally expected cocoa demand to grow some 2.5% this year, but are now seeing growth of just 1%, followed by no growth next year if inflation persists and the Russia-Ukraine war continues, traders and experts say.

Some chocolate makers, including majors Lindt (LISN.S) and Nestle (NESN.S), withdrew from or reduced sales in Russia this year to protest the invasion. But Lindt said the impact of that move on its finances would be small.

Against the backdrop of rising inflation, chocolate manufacturers are changing their pricing policies and production technology.

Hershey in certain cases slims down package size and keeps the price similar - commonly known as "shrinkflation" - to retain customers who say they only have $3 to spend on a bag of chocolate Kisses, rather than $5 or $6, Poole said. It has not used this tool "as often as you might think" because of the time and planning involved, she said.

"Inflation has been so significant, we rely more on list price increases," Poole said. About 20% of Hershey's products are below $2, down from 25% in April.

Mondelez, which makes Cadbury and Milka chocolate, has also "made the decision to slightly reduce the weight of certain products," said spokesperson Tracey Noe in an email. Cadbury Dairy Milk bars sold in the UK are now smaller.

Mondelez CEO Dirk Van de Put said last month at a conference the company is "doing everything that's in (its) power to prepare for potentially a consumer that reacts" to price hikes and an economic recession, including investing in advertising.

Picked and squeezed for you: Irina Iakovleva