News around the World

A major leak of classified Pentagon documents

The Biden adminstration is scrambling to assess and dealing with the fallout from a major leak of classified Pentagon douments. It is not the first to hear that there is classified information leak in the Biden adminstration. However, this time will be much more serious.

The highly sensitive documents which include details about how the US spies on allies and adversaries appeared online last month on the social media platform Discord. The posts are photos of sensitive documentns laid on top of magazines and surrounded by other random objects. Those document all bore classified markings, some top secret – the highest level of classification. Those 53 leaked documents seem to be produced between mid-February and early March. A representative from the social media Discord confirmed that their team is cooperating with law enforcement on the investigation.

One document reveals that the US intelligence has been spying on Ukrainian Presisdent Volodymyr Zelensky. Ukrainian officials are deeply frustrated about the leak even Zelensky adminstration is not surprised about it.

Another remarkable reveal will be the conversation between two senior South Korean national security officials over a US request for ammunition. The details of the communication was about Korean officials worried that supplying the ammunition, which the US would then send to Ukraine, would violate South Korea’s policy of not supplying lethal aid to countries at war. The documents also show the one of the officals suggested a way of getting around the policy without actually changing it – by selling the ammunition to Poland. The details of the document has sparked controversy in Seoul.

Another controversial intelligence reoprt is related to Isreal. The report which produced by the CIA said that Isreal’s main intelligence agency has been encouraging protests agains the country’s new government.

US allies are doing damage assessments to determine whether any of their own sources and methods have been compromised by the leak. The leak was frustrating and harmful to the US reputation. To date, key allies have not yet been given a briefing by the US on where they are on the damage assessment or efforts to identify the leakers.

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News around the World

Nancy Pelosi expected to visit Taiwan tonight

The US congressional delegation’s itinerary includes stops in South Korea and Japan, but no official mention has been made of a visit to Taiwan. However, the Taiwanese official said that Nancy Pelosi is expected to stay in Taiwan overnight. It is unclear when exactly Pelosi will land in Taipei.

China warned against the “egregious political impact” of Pelosi’s planned visit to the self-governing island that China claims as a part of its territory and reiterated that its military “won’t sit by idly” if Beijing feels its “sovereignty and territorial integrity” is being threatened.

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The inflation is making the West difficult to go further on Russian oil

European Union and the United States have barred the import of Russian oil to cut off the revenue source for Kremlin and force Vladimir Putin to reconsider the war in Ukraine. However, it seems like this measure hasn’t worked.

When EU and the US looked at the data, they found that Russia is making just as much money from oil export as it was before the invasion of Ukraine. At the same time, global inflation is surging, and it generates Politian pressure on leaders like US president Joe Biden, British Prime Minister Boris Johnson, and French President Emmanuel Macron.

In the recent G7 meeting, these leaders tried very much to reach a consensus on that to do next. However, on oil, only few options are available. several measures were being discussed. For examples, price caps on Russian oil imports and centralized purchasing, insurance bans on ships. Unfortunately, these tools have downsides, and they could push the oil price and inflation rate even higher. These prospective measures may come with significant costs directly to consumers in the US and Europe.

Nevertheless, there is an uptick in exports to Asia. China is currently taking advantages of huge price discounts. Russia is selling barrels of its Urals crude for about USD 35 cheaper than the Brent global benchmark. The Kremlin is still getting a pretty good price for their oil export. The West need to go further to get Russian oil off the market quickly, since any delay will give market participants time to come up with creative ways to skirt the rules.

To make it harder for China, India, and other countries to keep importing Russian oil, EU intends to phase in a ban on insuring ships. Such a move may push China and India to find replacement barrels, the price of oil could easily go rocket high.

Therefore, Treasury Secretary Yellen suggested that using price caps to push down the price of Russian oil and depress Putin’s revenues while allowing more oil supply to reach the global market.

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Decoupling, one of the biggest risk to the global economy

Global Markets may still underestimate the impact of China’s strict zero-Covid policy. Until now, nearly 400 million people across the mainland China are under full or partial lockdown. 

Investors probably do not aware of this zero-Covid policy as much more attention remains focused on the Russian-Ukraine war and the US Federal Reserve rate hikes.

However, more and more analysts are ringing warning bells as Shanghai, a city of 25 million and one of China’s premiere manufacturing is under the indefinite lockdown. The quarantines left the largest port in the world understaffed. Food supplies stuck in shipping containers, incoming cargo is now stuck at Shanghai marine terminals and cargo airlines were cancelled all flight in and out of the city. Sony, Apple supplier plants, Quanta Factory and Tesla factory in and around Shanghai, are idle.

The impact on China is major and the ripple effect on the global economy is also significant.

The ongoing disruption to manufacturing and shipping in China may help accelerate the US president Joe Biden to reduce US dependence on products and supply chains from China. Some US economic leaders believe that decoupling is underway. However, it is extremely difficult. Globalization is not something that is easy to be reversed because it would be incredibly costly.