In Geopolitics Today: Wednesday, February 1st
Argentina Exploring the Purchase of Armoured Vehicles from Brazil, OPEC+ Set to Maintain Oil Production Levels, and other stories.
Argentina Exploring the Purchase of Armoured Vehicles from Brazil
Argentina and Brazil have signed a letter of intent to negotiate the purchase of 156 Guarani armoured vehicles. The vehicles will be used to equip a mechanized infantry brigade for deployment abroad with the Southern Cross Force, a binational Argentine-Chilean military formation.
The negotiations are expected to result in a contract within the year. The negotiations stipulate that the Brazilian government will provide financial guarantees and credits for the export of goods, including military equipment, to Argentina. The Guarani vehicles are produced by Iveco Defense Vehicles in Brazil and weigh about 17 tons. The vehicle comes in three variants: troop transport vehicles, infantry combat vehicles, and command post vehicles. The cost of the potential order is currently estimated at $180 million.
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The US Air Force Successfully Tests Hypersonic Scramjet Missile
The U.S. Air Force and Defense Advanced Research Projects Agency (DARPA) have successfully tested the Hypersonic Airbreathing Weapon Concept (HAWC) missile, reportedly reaching Mach 5 flight and traveling 300 nautical miles.
The HAWC will serve as a platform for developing future hypersonic technologies and has been described as the most successful hypersonic airbreathing flight test program in US history. The Air Force is also working on two other hypersonic missile systems. The HAWC is powered by a scramjet engine, which allows it to achieve high speeds and makes it highly deadly. The final test of the HAWC system will inform the development of future programs and bring progress to US purchases of the missile at a greater scale.
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Bangladesh Receives Major Loan from the IMF
The International Monetary Fund (IMF) has approved a loan program of $4.7 billion for Bangladesh, with $3.3 billion covered under the IMF's extended fund facility, $476 million to be immediately disbursed, and $1.4 billion approved under the IMF's resilience and sustainability facility for climate investment.
The loan will help Bangladesh boost the country’s foreign exchange reserves, allowing it to resume import of energy supplies. However, the IMF loan will likely result in inflationary pressure due to an influx of new money and high energy prices. The country's external debt remains at 20% of its GDP and its inflation rate currently sits at 8.7%. The IMF loan may lead to anti-government protests in the short term, with general elections for the government in Dhaka scheduled for January 2024.
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OPEC+ Set to Maintain Oil Production Levels
OPEC+ agreed to maintain their current oil output level at a meeting on Wednesday. The OPEC+ Joint Ministerial Monitoring Committee — which tracks the group's compliance with production quotas — met digitally and recommended production levels to be maintained at their current levels.
The OPEC+ cut in November amounted to 2% of world demand and prompted a response from United States as Washington chose to release more oil from its Strategic Petroleum Reserve to keep prices down. This time OPEC+ has sought to keep oil output unchanged, perhaps in an effort to appease the Biden administration. In addition, with China lifting COVID-19 restrictions, global oil demand is expected to rise this year.
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Turkmenistan as a Transit Hub for Russian Deliveries to South Asia
The Russian Prime Minister, Mikhail Mishustin, and the speaker of the Russian State Duma, Vyacheslav Volodin, have both recently visited Turkmenistan in efforts to strengthen the strategic partnership between the two countries. A bilateral strategic partnership was first established in October 2017, and a joint commitment to deepen the relationship was signed in June last year.
Russia may be looking to rely on Turkmenistan as a transit hub for delivering goods to South Asia. The two countries signed eight intergovernmental agreements recently, covering areas such as migration control and customs administration. Despite these efforts, Tajikistan also considers itself a strategic partner of Turkmenistan, and has made efforts to build closer ties with Dushanbe. Whether Russian incentives to Turkmenistan will secure a transport corridor for Moscow remains to be seen, but increased US and EU focus on the region in support of regional cooperation frameworks that exclude Russia may spoil Moscow’s plans in the medium-term.