BLACKWATER USA | DAILY BRIEF

COVID-19

*       The CDC issued new guidance for public health models, estimating

that 35% of those infected with coronavirus will not show symptoms, and 40%

of transmission is happening before symptoms start. [The CDC warned that

even these updated numbers are still rough guesses-there hasn't been enough

antibody testing to know for sure how many carriers are asymptomatic.]

China

*       China's grand move on Hong Kong is that it's going to introduce a

new national security and anti-sedition bill on the territory's behalf,

since Hong Kong hasn't been able to pass its own such bill due to protests.

China's National People's Congress is expected to rubber stamp the bill into

law later this month.

*       The timing is very clever: with the rest of the world distracted by

coronavirus, China probably won't face as much resistance as it did when it

advocated for a similar tightening of its grip on Hong Kong last summer. A

WSJ article pasted below has more.

*       Hong Kong's Hang Seng Index saw its largest drop since 2015 on

worries that China's takeover will lead to renewed protests, strained trade

relations between Hong Kong and the U.S., and the potential exit of U.S.

companies from Hong Kong.

*       Separately, China quietly dropped its GDP growth target (and

promised more government spending) to avoid reporting a 6.8% drop in GDP in

Q1 2020 due to coronavirus.

U.S.

*       The U.S. said it would pull out of the Open Skies Treaty, which lets

its 30+ member nations conduct unarmed flights over each other's territory

to reduce suspicions of military buildups. Russia irked Pres. Trump by

violating the treaty in the past, but is now complaining about the U.S.

withdrawal.

*       There have now been 38.6 million jobless claims in the U.S. over the

past nine weeks, but some of those are related to a "jaw-dropping" level of

fraud, including attempts by Nigerian scammers to file for benefits in

multiple U.S. states.

Libya

*       Russia reportedly transferred six MiG-29 fighters and two Su-24

attack planes to Libya to help the LNA-or, as a European official quoted in

the NYT thinks, to send a signal to Turkey and the GNA to slow down their

offensive against the LNA and negotiate a solution.

*       After a phone call between the Russian and Turkish Foreign Ministers

yesterday, both Russia and Turkey called for an immediate ceasefire and

advocated a new round of UN peace talks. [The same thing happened in

January, but Khalifa Haftar was in a better position then, and pressed on

with his offensive on Tripoli despite discouragement from Russia, which

allies with him.]

Afghanistan

*       Reuters says that-despite SecState Pompeo's threat to withhold

funding to the ANSF because Pres. Ghani and Abdullah Abdullah couldn't get

along-funding was never actually withheld. That means there's no need to

turn the spigot back on now that Ghani and Abdullah have reached a

power-sharing agreement.

Iran

*       The U.S. imposed sanctions on Iran's interior minister yesterday for

committing human rights abuses when he authorized security forces to use

lethal force against anti-government demonstrators.

Venezuela

*       At Russia's behest, the UNSC held a hearing on Wednesday about the

botched coup attempt in Venezuela. The U.S. defended against claims it was

behind the incident, and fired back at Venezuela's "habit of blaming others

for its appalling choices."

*       The Bank of England is refusing to release the $1 billion in

Venezuelan gold it holds because of sanctions, despite a lawsuit Venezuela

filed to ask for its release to fight COVID-19.

Azerbaijan

*       Azerbaijan and Armenia recently traded barbs over a new issue: the

other side's collaboration with Nazis during WWII. Of course, both sides

collaborated far more with the Soviet Union than with Nazis, so the Nazi

angle seems like an odd one to bring up...to me, it just shows they'll fight

over anything.

Strategic Minerals

*       Chinese EV maker Svolt unveiled two cobalt-free lithium batteries,

which it says will be available in its cars in 2021. Svolt says the new

batteries have a longer cycle life, better safety, and higher energy density

than cobalt batteries. [Tesla is also trying to switch to non-cobalt

batteries, and already uses low-cobalt NCA ones.]

*       DRC's Chamber of Mines expects a fresh round of "survival of the

fittest" M&A due to COVID-19: equity has been wiped out for a lot of mining

companies, leaving those with cash to scoop up targets at great valuations.

Other News

*       A Pakistan International Airlines Airbus A-320 with over 100 aboard

crashed shortly before landing in Karachi from Lahore. Pakistan's aviation

authority says it lost comms with the plane around one minute before its

landing, but that's the only info we have so far.

China Plans New National-Security Laws for Hong Kong (Economist)

Beijing says the legislation is aimed at stopping what it considers

'secessionist and subversive activity,' foreign interference and terrorism

in the city

China signaled it will impose new national-security laws on Hong Kong,

dealing a blow to the territory's autonomy as Beijing seeks to stamp out

widespread pro-democracy protests that have challenged leader Xi Jinping.

Beijing's lawmakers will review a resolution to set up and improve legal and

enforcement mechanisms for national security in Hong Kong, with

consideration to "new circumstances and needs," a spokesman for the

legislature said at a briefing on Thursday, without elaborating.

President Trump said details on Beijing's plans aren't yet known and

promised to "address that issue very strongly" if China proceeds.

The surprise move would override Hong Kong's system of self-governance and

reflects growing frustrations within China's leadership over the

long-running and at times violent unrest that began last summer and has

often targeted the Communist Party and other symbols of Chinese rule.

Enacting new security restrictions could further undermine the Western-style

rule of law and freedoms that have underpinned Hong Kong's role as a global

financial center and that Beijing pledged to uphold as a part of the

territory's handover from the U.K. in 1997 after more than a century of

British rule.

"I feel sick," said Dennis Kwok, a pro-democracy legislator in Hong Kong who

has in recent weeks been the target of criticism from Beijing for holding up

legislation, including delaying the passage of a proposed bill that would

criminalize disrespect for China's national anthem.

Beijing's gambit also risks inviting international backlash and threatens to

erode business confidence in Hong Kong, though its economic importance to

China has waned over the past two decades, while the city has been dragged

into a recession by the protests and the Covid-19 pandemic.

The choice of a forceful and potentially costly solution to the Hong Kong

unrest underscores the increasingly assertive and unapologetic leadership

Mr. Xi has adopted, as he champions a brand of authoritarian governance that

he presents as superior to Western-style democracies. While Beijing last

year signaled it would tighten its hold on Hong Kong, doing so now comes as

the U.S., Britain and other European countries are preoccupied with the

pandemic.

After six months of protests-punctuated by clashes between police and

demonstrators-nobody knows what the future holds for Hong Kong as a place to

live and a financial hub. The clock is ticking: China's grip will tighten as

2047 nears and the city's unique freedoms expire. Photo credit:

Visualtraveling

In Washington, members of Congress condemned the move, with senators

promising an urgent push on legislation that would impose sanctions on

Chinese officials and institutions involved in undermining Hong Kong's

autonomy.

Sen. Chris Van Hollen (D., Md.) and Sen. Pat Toomey (R., Pa.) said the

legislation they had been preparing became more pressing given Thursday's

announcement by Beijing. Targets of the bill, if passed, could include

Chinese officials who enforce the new national-security legislation as well

as the banks that do business with them. "We would impose penalties on

individuals who are complicit in China's illegal crackdown in Hong Kong,"

Mr. Van Hollen said.

The Trump administration has frequently criticized China's more heavy-handed

rule over Hong Kong. Though Mr. Trump has at times appeared reluctant to

voice support for the protests as he pursued a trade deal with Mr. Xi, he

signed a measure last year requiring annual reviews of Hong Kong's autonomy

and authorizing sanctions against individuals involved in human-rights

violations there.

Hong Kong had been consumed by antigovernment unrest since last summer.

Sparked by a proposed extradition bill that was seen as eroding the

separation from the judicial system on the mainland, the protests grew into

a broader movement against Beijing's encroachment on the city's

self-governance. Millions took to the streets, with many waving signs and

chanting slogans denouncing the Communist Party, while a small but growing

faction started calling for independence for the city.

While the street protests have mostly stopped this year during the

coronavirus pandemic, Beijing has signaled an urgent desire for

national-security legislation in Hong Kong since late last year, when the

Communist Party's governing Central Committee approved plans to strengthen

the city's legal and enforcement mechanisms for safeguarding national

security.

China had pledged to keep Hong Kong's "capitalist system and way of life"

unchanged for 50 years under a "one country, two systems" principle agreed

to with the U.K., which had colonized the territory during the 19th century.

That same agreement yielded a mini-constitution for Hong Kong, known as the

Basic Law, which took effect in 1997 and required the city to enact its own

national-security legislation. An attempt to do so in 2003 was abandoned

after half a million people took to the street in protest. Local authorities

haven't put forward any similar bills since.

Hong Kong May Survive, But Not Thrive, With Fewer Rights

Beijing largely tolerated this legislative gap until Hong Kong was engulfed

last year in protests widely seen as the worst the city has experienced

since returning to Chinese rule. In response, Mr. Xi shook up his approach

to governing the territory, replacing top officials at the central

government's Hong Kong policy agency and its liaison office in the city.

In April, the new liaison-office director, Luo Huining, declared that Hong

Kong's legal framework for national security must be improved as soon as

possible, especially after Beijing waited more than two decades in vain for

the city to do so.

"Formulate what should be formulated, revise what should be revised," he

said in a speech. "We must never allow Hong Kong to become a breaching point

for risks to our national security."

Such comments had pro-democracy activists in Hong Kong bracing for a fresh

government push to introduce national-security laws, though many of them

expected Beijing to go through the city's legislature-in line with the "one

country, two systems" framework.

The proposed Hong Kong resolution, however, suggests that Beijing sees

little chance of success going through the usual process, in which

controversial bills often get stymied by bickering between opposing camps of

pro-Beijing and pan-democrat lawmakers.

This time, legal experts say, Beijing appears to be bypassing Hong Kong's

legislature by tapping a provision in the Basic Law that allows China's

parliament to-in certain circumstances-apply national laws to Hong Kong

through promulgation by the city's leader.

The National People's Congress, China's legislature, is expected to

rubber-stamp the resolution next week. It wasn't clear when the congress may

draw up specific national-security legislation for Hong Kong, or when they

may be promulgated.

Some of the city's pro-democracy activists say Beijing may wish to put the

new legislation in place before Hong Kong's legislative elections in

September-where pro-establishment parties could suffer heavy losses that

would make it easier for pro-democracy groups to block bills, such as new

national-security measures.

Foreign diplomats said China appeared cognizant of the likely international

concerns arising from new national-security laws in Hong Kong, citing

Beijing's efforts to assure foreign governments that their interests in the

Asian financial center would be protected.

The Chinese Foreign Ministry arranged late-night phone calls on Thursday to

inform many foreign embassies in Beijing, including those of Asia-Pacific

and European governments, about the proposed Hong Kong resolution, people

with knowledge of the matter said.

The Foreign Ministry also sent letters to ambassadors at some of those

embassies explaining Beijing's rationale for introducing the Hong Kong

resolution and appealing for their governments' understanding and support,

according to the people and a copy of the letter viewed by The Wall Street

Journal. The letter also solicited responses from those envoys.

The ministry conveyed similar messages over phone calls to some embassies

that hadn't been sent the letter, some of the people said.

"The opposition in Hong Kong have long colluded with external forces to

carry out acts of secession, subversion, infiltration and destruction

against the Chinese mainland," the letter said. While only "a tiny minority"

were engaging in separatism and terrorism, these people must be punished in

accordance with the law, it said.

The Foreign Ministry letter also said "Hong Kong has become a notable source

of risk to China's national security" because of legal loopholes and a lack

of enforcement mechanisms. Addressing these gaps is "something that must be

done-and done without delay," it said.