Authored by Brad Jones via The Epoch Times (emphasis ours),

A trip to the U.S.-Mexico border in Arizona was all it took for Robert F. Kennedy Jr. to change his mind on the need for a border wall pushed by his political rival former President Donald Trump.

“I went down to the border feeling that Trump has made a mistake on the wall, but I feel like people need to be able to recalibrate their worldview when they’re confronted with evidence,” he told a crowd of more than 300 on Aug. 3 at the premiere of his documentary, Midnight at the Border.

When asked by a news reporter at a press conference that followed the premiere at the Saban Theatre, if rumors that a Trump-Kennedy presidential ticket in 2024 were true, Mr. Kennedy ruled out the possibility of the unlikely Republican-Democrat pairing.

“In my experience, a lot of the stuff that you read in the mainstream news and the corporate news is what I would call conspiracy theories,” he said.

His response was met by laughter and applause.

“No, I will not be Donald Trump’s vice president,” he said.

The ‘Yuma Gap’

The 19-minute video documents Mr. Kennedy’s after-midnight visit on June 6 to an infamous gap in the border wall near Yuma, Arizona, known as the “Yuma Gap” where the California, Arizona, and U.S.–Mexico borders meet along the Colorado River.

Of the hundreds who crossed the border illegally that night and were apprehended by the U.S. Border Patrol, many weren’t from Latin American countries as Mr. Kennedy expected, he said, but from Africa, Eastern Europe, and Asia.

“Only two families said they were claiming political persecution. The rest just told us openly they were coming here to make money, coming here for a better life. So, they didn’t even have that claim. And those immigrants shouldn’t be allowed into the country. We should stop that at the border,” he said.

In the film, Mr. Kennedy interviews U.S. authorities on the border crisis and illegal migrants, most of whom weren’t claiming asylum, the official reason and legal premise for them to remain in the country.

“What we should be doing and what we used to do is we would process them at the border, and only 15 percent of them were adjudicated as legitimate. The other 85 percent were adjudicated as specious,” he said. “And, under normal conditions, the specious claimants are not allowed into this country. They’re turned away. If we were doing that today, the entire business model of the cartels would collapse.”

With U.S.–Mexican relations at a low, Mr. Kennedy said one of his priorities if elected president would be to reestablish a better relationship with Mexico and other countries south of the border to stem the flow of immigration.

“This trail of immigrants is not good for them,” he said. “It’s destabilizing.”

The Biden administration’s current border policy isn’t serving the best interests of the American people nor those of Democrats or Republicans, nor migrants or “our neighbors to the south,” Mr. Kennedy said.

The crisis shouldn’t be a partisan issue and to solve it, the best ideas of both political parties should be put on the table, he said.

“We have a policy now that is not serving anybody’s interest,” he said. “Everybody is getting hurt by this policy.”

While the wall has been a divisive issue, it shouldn’t be, he indicated.

“I was against Trump’s wall. I thought it was a crazy idea. To me, it was a big mistake,” he said.

But, despite his sister Rory Kennedy’s award-winning 2010 documentary “The Fence,” “showing all the reasons we shouldn’t build it,” he now suggests compromise is needed.

“I don’t think we do need a wall as we were told that had 2,200 miles between Brownsville and San Diego,” he said. “But, we need something.”

Mr. Kennedy also suggested more cameras and drone surveillance is needed along the border.

“Midnight at the Border” reveals how the cost of an unsecured border is paid in illicit drug overdoses and the human trafficking of migrant women and children.

Residents of U.S. border towns told Mr. Kennedy and his film crew they wouldn’t let their children play outside “because they were scared of these strangers … running across the yard fleeing from the Border Patrol, which is a very common occurrence,” Mr. Kennedy said.

The film notes that in 2022, the federal Drug Enforcement Agency seized about $379 million in doses of fentanyl.

Last year alone, 109,000 people in the United States died from drug overdoses, 67 percent from synthetic opioids such as fentanyl, according to the U.S. Centers for Disease Control and Prevention.

Human Suffering

Not only does the border crisis put people’s lives at risk crossing rivers and deserts, it also puts them and their life savings at the mercy of cartels.

“They get extorted. They get raped. They get robbed,” Mr. Kennedy said.

One scene in the film describes an infamous “rape tree” where Mexican smugglers, known as “coyotes,” have sexually assaulted women and children as young as 12 and then force their female victims to take “morning after” abortion pills.

Illegal immigration also reduces wages for every working American, Mr. Kennedy said at the press conference.

“We’re creating this understory of exploitable poor,” he said. “These people are being paid by unscrupulous employers $5 or $6 an hour, a half of their lives here. And there’s no way they can change that. They have no leverage and no bargaining power.”

These employers use the threat of exposing the immigration status of migrants to protect their own interests over those of the country, Mr. Kennedy said.

“If you really wanted to end the border crisis … the most obvious thing to do would be to prosecute people who hire illegal aliens—the businesses,” he said. “I’m not saying that this is what we need to do right away, but I’m just pointing to the obvious.”

When President Ronald Reagan came into office, there were 1 million illegal immigrants in this country. It wasn’t a crisis because about 30 percent of the workers in the United States belonged to labor unions that helped to keep illegal immigrants from being hired, Mr. Kennedy said.

Now, about 10 percent of the American labor force is unionized and illegal immigrants who show up on job sites aren’t reported, he said.

“I am a traditional Kennedy Democrat. I think human dignity and particularly dignity of the workers and the American middle class are the foundation stones not only of our economy, but of American democracy,” he said.

China’s state broadcaster CCTV has kicked off the airing an eight-episode military documentary series called Zhu Meng, or “Chasing Dreams”, which features battle-ready Chinese troops pledging to sacrifice all, even themselves, for the sake of ‘liberating’ Taiwan. 

The series marks the 96th anniversary of the founding of People’s Liberation Army (PLA), and seeks to highlight that Chinese forces are ready to fight “at any second”. It additionally sends a signal to Taiwan’s Western backers, including the United States, of how seriously Beijing will take any future provocation. 

Among the many examples of over-the-top vows to go on suicide missions if need be, include a stealth J-20 pilot describing that “My fighter would be my last missile, rushing towards the enemy if in a real battle I had used up all my ammunition.”

In another scene, a frogman of the PLA Navy’s minesweeper unit tells the viewing audience, “If war broke out and the conditions were too difficult to safely remove the naval mines in actual combat, we will use our own bodies to clear a safe pathway for our landing forces.”

Also, according to The Associated Press, drills simulating an attack on Taiwan are highlighted in the docuseries: 

The “Chasing Dreams” documentary showcased, among other things, the PLA’s “Joint Sword” drills, which simulated precision strikes against Taiwan. The exercises were undertaken around the self-governed island in April after a visit by Taiwanese President Tsai Ing-wen to the U.S.

Washington has at the same time continued making significant moves in support of Taiwan. The White House last month approved its latest military aid package for Taiwan, valued at $345 million. 

“Always ready to go to war!”—reads the header for the first installment of the CCTV docuseries. Watch:

And on Monday, President Biden signed into law a bill which initiates a new US-Taiwan trade agreement, part of the US-Taiwan Initiative on 21st Century Trade.

The whole initiative seeks to deepen the US-Taiwan economic relationship “streamlining customs procedures, combating corruption and helping small businesses navigate regulatory procedures in both markets,” according to a description in regional media.

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

The economy has marched forward, ignoring higher interest rates and consistent calls for a recession. Credit goes to “We The People,” the citizens of the U.S. A shout-out also goes to Uncle Sam for showering us with trillions of dollars of stimulus during the pandemic to fuel consumption.  

Understanding why the economy has done so well is easy. Simply massive stimulus drove consumption. The difficult task ahead is forecasting how much the remnants of stimulus, and other forms of financial relief, will continue to fortify personal consumption and boost economic activity.

Personal consumption growth rates are showing signs of fatigue. Given personal consumption consistently accounts for over two-thirds of economic activity, it’s worth exploring that state of the consumer to appreciate better what the economy may have in store.

Consumption

Before exploring the means by which consumers can spend, let’s review some of the more popular economic statistics that focus on personal consumption. Such allows us to put recent trends in a historical perspective.

Retail Sales is one of the most widely followed reports tracking consumer spending. As shown below, retail sales are tracking well above the pre-pandemic trend (red dotted line). The green bars show excess sales, or the amount above the trend.  

As we project economic growth, we must concern ourselves with growth rates and not absolute levels of economic activity. Therefore, the growth rate of retail sales matters much more than the total sales shown above.

The graph below sheds a less rosy light on retail sales than the one above. The year-over-year growth rate in retail sales is near zero percent. Accounting for inflation, retail sales are falling 2-4% annually. Since the start of the year, retail sales have fallen by half a percent and two percent below where they would be based on the pre-pandemic trend growth.

Johnson Redbook, a weekly private measure of retail sales, confirms the recent weakness in retail sales growth.

Consumption (PCE)

While the graphs above show stagnant to negative retail sales growth, personal consumption expenditure (PCE), the measure used to compute GDP, is still above trend.

Unlike Retail Sales and Johnson Redbook, PCE includes the sales of services.

Spending in the service sectors, such as travel, leisure, and restaurants, has recently grown disproportionately faster than most other goods and services. Some claim that post-pandemic “revenge” spending is still in play!

In the first year of the pandemic, goods sales increased by 21% while services fell by 2%. Since then, the performance has been almost the exact opposite, with goods consumption falling by 2.75% and services rising by 22%.

With spending on goods flat-lining, the services sectors will be a crucial gauge to estimate the health of consumer spending.

Means to Consume

With an appreciation for the post-pandemic spending trends, it’s worth appreciating the means of allowing consumers to spend. 

During the pandemic, the federal government rained money on the public and provided various other forms of financial benefits and relief.

The graph below shows spikes in disposable income related to the two pandemic relief payments from the government. It also shows that disposable income has trended slightly below average after those payments. The purple line shows cumulative disposable income versus the trend. As it approaches zero, the excess pandemic-related income above trend vanishes.

The following graph shows the after-inflation growth in average salaries and aggregate salaries. The average wage has been below the inflation rate for almost two years. The aggregate of all salaries is higher. Such is a function of the number of employees growing and offsetting negative real wage growth.

The graphs above tell the story that individuals have primarily used the stimulus-related income from the government to help support their consumption and offset declines in real wages. From a macro perspective, the above-average workforce growth boosted real growth in aggregate wages, which also helped propel the economy. However, with the unemployment rate hovering near 50-year lows, further outsized gains in employment will prove tricky.

In fact, as we share below, monthly gains in employment are now back to pre-pandemic trends.

We leave this section with a confounding graph. Why are tax receipts declining if payroll and wage growth are strong and markets robust? Might it be that lower-paying jobs in the leisure and hospitality industries are replacing higher-paying jobs?

Savings and Debt Fueled Consumption

When consumers received stimulus payments, their ability to consume was limited. Supply chain problems, inventory shortages and mandated and self-imposed restrictions, and behavior changes due to the pandemic meant much of the stimulus money was initially saved.

The following graph shows the jump in savings commensurate with stimulus. The chart highlights that consumers saved less than average after the two giant government stimulus checks were distributed and drew down on elevated savings to consume. However, and this is important, cumulative personal savings are now below the longer-term trend.

The bottom line is that consumers saved less and have largely drawn down the stimulus-related excess savings. It appears that savings drawdowns in aggregate will no longer contribute to above-trend consumption.

However, with dwindling savings, consumers have resorted to debt to supplement their purchasing power. The graph below shows the sharp increase in credit card debt outstanding.

Such growth, led by debt and savings reductions, is not sustainable. The recent Fed SLOOS survey (Senior Loan Officer Opinion Survey) showed that demand for credit continues to weaken. And at the same time, banks are tightening their lending standards. Banks are less likely to extend credit card lines or bump up credit limits. Also, credit card borrowing rates are now over 20%, which means those not paying their balances in full will spend more on interest and, therefore, have less for goods and services.

As we finished this article, we learned that revolving credit fell in June for the first time since March 2021. One data point doesn’t make a trend, but it bears watching!

Employment and Sentiment

The ability and means to spend are essential, but we would be remiss if we did not discuss the desire to spend. When the economy is strong, and consumers feel confident in their jobs, they tend to spend more than average. Conversely, when friends or colleagues lose their jobs or feel threatened with losing their job, confidence wanes, and saving, not spending, takes precedence.

The unemployment rate graph below may be the most important economic indicator. Unfortunately, it’s not predictive. It often doesn’t start rising until a month or two before the start of a recession.

The following graph, courtesy of the University of Michigan Consumer Survey, shows that a considerable divergence in sentiment is emerging between the haves and have-nots. It may likely be that the stock market gains are bolstering the wealthy, allowing them to spend more than they would otherwise. However, sentiment remains poor for most consumers with minimal stock holdings. 

Summary

The fumes of pandemic stimulus and related personal consumption continue to keep the economy running strong despite the increasing headwind of high-interest rates.  

The question we must now ponder based on the material we present is whether economic and consumption trends revert to their natural growth trends or do the increasing headwinds of high-interest rates cause below-trend or negative personal consumption.

We think the labor market will be the key to answering that question. If the labor markets remain healthy, we will likely see consumption and economic trends revert to pre-pandemic norms.

If, however, higher interest rates and credit contraction weigh on the economy, as they always have, consumers will likely want to bolster their savings and pay down their debt at the expense of consumption. Timing such a potential slowdown or recession is very difficult given the last few years’ large financial and behavioral imbalances haven’t entirely worked their way out of the system. 

By Michael Msika, Bloomberg Markets Live reporter and strategist

Real estate stocks have shown signs of life in July, giving investors a taste of what the most-shorted sector in Europe could do if the outlook improves even slightly for the industry.

The Stoxx 600 Real Estate index bounced nearly 14% between late June and late July, trimming this year’s decline. Its 4.6% loss year-to-date is still the second-worst after miners among sub-sectors in Europe. But there are signs that peak pessimism may not be far away, and that the stocks may already be pricing in further earnings and credit deterioration, offering a cushion to prices.

“We’re optimistic on real estate for the rest of the year as we see the downside from higher interest rates now priced into book value,” says UBS strategist Gerry Fowler. “Companies like Vonovia have also implemented a lot of self help, which is fantastic when you’re very cheap. The sector is now at the top of our framework scoring after remaining at the bottom earlier this year.”

As a highly-levered sector, real estate has been challenged since the end of 2021 as rising interest rates and soaring inflation squeezed consumers and companies. Valuations have dropped dramatically and are now at a 30% discount to the 2023 EPRA net tangible assets as estimated by UBS. Most of all, the sector became a short sellers’ favorite.

“European real estate stands as the most crowded short of all sectors and markets,” says UBS analysts including Charles Boissier, a trend that started in the fourth quarter 2021, and points to potential “short squeezes” ahead. The analysts note that short interest on the sector has been decreasing for four consecutive months now, driven lower by some of the most-shorted names including Aroundtown or Unibail-Rodamco-Westfield.

SBB remain the most-shorted real estate stock, followed by Balder, Fabege, Aroundtown and LEG, “the common theme being their higher-than-average leverage,” the analysts write. They also note Klepierre has seen a rise in short interest in past month, while short interest remains high in Sweden in particular.

The latest earnings season hasn’t been great for real estate stocks, one of the few sectors tracking negative EPS growth at -4%, and showing a downside surprise of 23%, according to JPMorgan strategists. That said, the majority of companies reporting have beaten estimates, while the sector’s performance seems to have undershot the trend, and stocks could already be pricing a further drop in profits. 

To be sure, the sector is still facing challenges, and any bounce could be short-lived. The latest rebound is already showing signs of stalling as equity markets wobble. Retail and office exposure remain a concern for the sector, while the work-from-home trend is a long term headwind for office rents, according to Barclays strategists. Higher rates are pressuring valuations and may lead to some companies’ balance sheets being questioned, with potential capital raises ahead, they add.

One of the biggest risks is that rates rise on the back of stubborn inflation, and policy rates adjust sharply higher, according to JPMorgan derivatives strategists. Other risks include inflation starting to moderate at a slower pace forcing central banks to hike more, a sharp recession, or a credit crunch, but none of those is their base case. JPMorgan forecasts bond yields to trade lower into year-end and the first half of 2024 in Europe, US and UK, as evidence of disinflation builds and the end of the hiking cycle approaches.

“We believe real estate, expressed through Vonovia, may have the attributes to surprise the market on the upside given our high-conviction view that rates will trade lower, the sector’s high and negative sensitivity to rates, and its poor performance over the last 18 month resulting in rock bottom valuations,” says JPMorgan derivatives strategists led by Davide Silvestrini. “We think a lot is priced in.”

On Wednesday, the Thai Rice Exporters Association revealed that the price of Thai white rice 5% broken, a key Asian benchmark, reached the highest level since Great Financial Crisis. This surge is mainly attributed to increasing fears of a global shortage due to the damaging effects of the El Nino weather phenomenon on Asian farmlands and India’s recent decision to restrict certain rice exports.  

Thai white rice 5% broken hit $648 per ton this week, the highest level since October 2008. Prices are up over 50% since the start of 2022. 

The weekly change in rice prices is about a 13% surge, the largest since the index began in the summer of 2008. 

We provided readers with enough understanding that rice, which is critical to the diets of billions of people worldwide, was headed for a shortage:

• Sept. 2022: The Stage Is Being Set For A Massive Global Rice Shortage
• May 2023: Global Rice Shortage Looms, Set To Be The Biggest In Decades
• May 2023: Thai Rice Crop In Crosshairs Of El Nino As Farmers Are Warned About Water Shortages

And now comes the panic:

• July 2023: “So It Begins”: US Supermarkets Hit With Buying Panic As India Bans Rice Exports

India’s move to ban some rice exports sent shockwaves worldwide and was to ensure domestic supplies were adequate to prevent a hyperinflationary spike in food prices that would ultimately spark social unrest. Also, Thailand, the second-biggest shipper, has asked farmers to switch to crops that use less water due to arid conditions. 

India’s export restriction applies to shipments of non-basmati white rice.

The latest report on global food prices from the Food and Agriculture Organization of the United Nations showed the global food index, which tracks monthly changes in the international prices of globally-traded food commodities, jumped the most in 18 months. 

Last month, Bloomberg quoted Peter Timmer, Professor Emeritus at Harvard University, who warned: “There is considerably more reason for concern now that rice prices in Asia could spiral out of control pretty quickly.”

Authored by Steve Watson via Summit News,

A report by the Special Inspector General for Afghan Reconstruction (SIGAR) notes that the Biden administration has given $2.35 billion to Afghanistan over the past two years, despite the fact that it is now ruled by the Taliban again following the disastrous U.S. withdrawal in 2021.

The Washington Free Beacon shared details of the findings Tuesday, noting that the funds could be propping up the Taliban’s terrorist government.

The SIGAR report found that approximately $1.7 billion “remained available for possible disbursement” at the time writing. The Beacon notes that “it is more than likely that a sizable portion of these funds will end up in the terror group’s coffers.”

The Taliban are viewing international aide as a “revenue stream,” according to the report, which further states that the group is “comfortable accepting foreign support insofar as they can closely monitor the organizations, including restricting and controlling them, and claim some credit for the provision of the benefits.”

The findings come after John Sopko, head of SIGAR, told the House Foreign Affairs Committee in April that he “cannot assure this committee or the American taxpayer we are not currently funding the Taliban,” and accused the Biden administration of blocking his efforts to find out.

Meanwhile, yet another aid package has been approved by Biden for Ukraine totalling $200 million, bringing the United States’ contributions to the country this year alone to more than $18 billion.

⚡️Today the 🇺🇸USA plans to announce the provision of a new package of military aid to 🇺🇦Ukraine in the amount of $200 million, — Reuters

According to agency sources, this package will include anti-tank missile systems, including TOW and Javelin systems, as well as demining… pic.twitter.com/ZmCEqx6BWG

— 🇺🇦Ukrainian Front (@front_ukrainian) August 8, 2023

A recent CNN/Ipsos poll found that a majority of Americans have had enough of taxpayer money being siphoned into the war against Russia.

A majority of the US opposes Congress authorizing additional funding to support Ukraine in the war, a new CNN poll finds https://t.co/0CFqoAVZx4

— CNN (@CNN) August 4, 2023

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The Kenyan Ministry of the Interior last week suspended the controversial tech firm WorldCoin and any similar entities from operating in the country.

Co-founded by OpenAI’s Sam Altman, WorldCoin offers free crypto tokens worth roughly $50 to people willing to have their eyeballs scanned by a device called the Orb.

“Relevant security, financial services and data protection agencies have commenced inquiries and investigations to establish the authenticity and legality of the aforesaid activities, the safety and protection of the data being harvested, and how the harvesters intend to use the data,” reads a statement from the Ministry issued last week.

Kenyan Cabinet Secretary Alfred Mutua was enraged over the technology, saying in a statement: “Let us support the stoppage of Kenyans being used as guinea pigs and their data being harvested.

“You have to ask yourself why your eyes are being scanned and information gathered. What does it mean and what will it mean to you and your offspring?“

Another CS, Kithure Kindiki, assured citizens that the government would undertake all measures to ensure public safety and the integrity of financial transactions involving so many citizens, according to Kenyans.co.ke.

Further, appropriate action will be taken on any natural or juristic person who furthers, aids, abets or otherwise engages in or is connected with the activities until the government deems WorldCoin is safe. 

Following the directive, police officers were deployed to disperse hundreds queuing at KICC, Nairobi for the exercise. 

The directive comes minutes after ICT Eliud Owalo had stated that the government was yet to kick out the international company as it had not broken any laws.

That said, WorldCoin technically hasn’t broken any Kenyan laws – which, we imagine, is one of the reasons it was rolled out there.

“There are security issues even though in relation to the current data laws, they have not breached anything. Our laws, regulations are not comprehensive,” said Owalo. “Within the existing legal framework today, there are no provisions in the law that the organisation has negated. However, there could be security and regulatory issues around it.”

In response to the ban, WorldCoin co-founder Alex Blania claimed that the company’s intentions are above board.

“Tools for Humanity (TFH) has paused World ID verifications in Kenya as we continue to work with local regulators to address their questions. We apologise to everyone in Kenya for the delay,” he stated.

Worldcoin’s stated purpose is to build a global identification system using iris scans, which can prove that a person is human. The company argues that in the future, when Artificial Intelligence (AI) is ‘fully functional,’ it will be difficult to determine whether a subject is human or machine.

However, the company’s conduct in collecting biometric data from across the world has attracted criticism and investigations from data protection regulators.

Investigators have pointed out that some of the techniques being used by the company, especially in developing countries, are exploitative.

In Kenya for instance, the company has been collecting data in exchange for crypto tokens equivalent to Ksh7,000. -Kenyans.co.ke

Blania defended his company with a lawyer-approved: “World ID is built for privacy. We look forward to resuming operations while continuing global rollout.”

Authored by Conor Gallagher via NakedCapitalism.com,

Azerbaijan has been blockading the lone road that leads to the region of Nagorno-Karabakh for more than seven months. Residents are reportedly running out of fuel and food. Ever since the breakup of the USSR, Azerbaijan and Armenia have been locked in a dispute over Nagorno-Karabakh, an enclave recognized as Azerbaijani territory by the international community but mostly populated by ethnic Armenians.

They fought a war there three years ago when Azerbaijan grabbed land in a six-week conflict that led to roughly 7,000 deaths. There have been periodic skirmishes ever since. While Nagorno-Karabakh is important to both sides, I don’t believe it is the primary reason Azerbaijan continues the blockade. The real reason is that Baku wants a peace deal that includes the opening of the Zangezur corridor – which would connect Azerbaijan and its Nakhchivan exclave wedged between Armenia, Turkiye, and Iran. The problem for Azerbaijan and Turkiye, which also wants the corridor, is that it risks a wider war. Iran has said such a corridor is a red line. Such a corridor would mean goods and energy could flow freely between Azerbaijan and Turkiye without having to be rerouted through Iran, thereby eliminating the lucrative fees Tehran charges for such transfers. This is part of the reason Iran is so opposed to such a plan and has beefed up its presence along its border with Armenia.

The nine-point ceasefire agreement signed under Russian mediation that ended the 2020 war included a  stipulation that Armenia is responsible for ensuring the security of transport links between the western regions of Azerbaijan and the Nakhichevan Autonomous Republic, facilitating the unhindered movement of citizens, vehicles and cargo in both directions. Azerbaijan and Turkiye have latched onto that point, insisting they have the right to set up transportation links through southern Armenia.

Azerbaijani President Ilham Aliyev is demanding that the corridor be opened as part of any lasting peace. Turkish President Recep Tayyip Erdogan reiterated that point on July 31, according to Hurriyet. Turkiye’s Foreign Minister Hakan Fidan said the same. According to Asbarez:

“The road to regional stability is through a comprehensive peace agreement. For this, the opening of the ‘Zangezur corridor’ is of great importance,” Fidan said.

Armenian Prime Minister Nikol Pashinyan has conceded on the issue of Nagorno, accepting that it is part of Azerbaijan. That was more than two months ago, and yet the blockade continues because what Baku really wants is the corridor, and it is willing to starve the people of Nagorno-Karabakh and risk war to get it.

Both Azerbaijan and Turkiye have proceeded since the 2020 war as if the corridor is on the verge of becoming a reality. Both have been working on highways and rail lines where the only missing link is the roughly 10-mile stretch through Armenia. Back in January Aliyev declared that the project “will happen whether Armenia wants it to or not.”

It remains to be seen if he will be so confident going against Iran’s wishes. Tensions have been steadily rising between Tehran and Baku in recent months. Azerbaijan and Israel are now alleging that Armenia is using Iranian Shaheed drones, which would mark a major increase in Tehran’s support for Yerevan and the latest escalation over the Zangezur issue. Armenia has denied using Iranian drones.

Israeli Foreign Minister Eli Cohen announced the creation of a “united front against Iran” during a press conference with his Azerbaijani counterpart Jeyhun Bayramov in Jerusalem for the opening of Azerbaijan’s embassy in Tel Aviv at the end of March. The close ties between the two are nothing new (Azerbaijan is Israel’s largest energy provider and the latter supplies the large majority of weapons to the former), but have ratcheted up in recent months.

In addition to escalating military exercises on their common border, Baku and Tehran are increasingly at odds over a range of other incidents. On Jan. 27, an attack by a gunman carried out at Baku’s embassy in the Iranian capital left the head of the embassy’s security services dead and two security guards injured. Azerbaijan quickly evacuated the diplomatic post.

Azerbaijan’s Foreign Ministry in late March accused Iran of being behind the shooting attack near Baku that left a member of parliament wounded. Azerbaijani media have speculated that some of the six individuals detained in the shooting lived or traveled to Iran at various times and that the primary attacker received training from Iranian special forces. Azerbaijan’s Foreign Ministry on April 6 also expelled four Iranian Embassy employees after declaring them persona non grata. Shortly after reports emerged about Azerbaijan arresting hundreds more while the media labeled them Iranian spies. Cohen was recently in Azerbaijan to open Israel’s first embassy in the country, which is located just 12 miles from the Iranian border.

The Zangezur issue is also causing friction between Ankara and Tehran, with Erdogan recently criticizing Iran for its opposition. India, too, is being drawn into the fray. Worried that a Turkiye-Azerbaijan-Pakistan alliance would upset the regional power dynamics and have repercussions for Kashmir, New Delhi is also sending arms to Yerevan.

If all of that doesn’t create enough of a powder keg, there’s also Washington neocons sticking their noses in.

Russia has long been the dominant player in the South Caucasus. Moscow put an end to the 2020 conflict by essentially telling Azerbaijan, which enjoyed an overwhelming advantage thanks to military support from Turkiye and Israel, to knock it off. Moscow mediated a peace and has had peacekeepers in the region, but Russia’s preoccupation with Ukraine and fending off efforts from the West at regime change has created a bit of a power vacuum. The US is now trying to play a central role in finding a solution to the Armenia-Azerbaijan disagreements in an effort to diminish Russian influence in the region (or stir up trouble).

Neocons in Washington have long dreamed of using Azeris to destabilize Iran. There is no indication this would work, nor are the wider repercussions of such an effort clear, but that will not stop the neocons running the US State Department from trying. The Middle East Media Research Institute, which is run by Israeli and American spooks, wrote as recently as November about using Azerbaijanis in Iran to further their goal of regime change:

In order to bring about regime change at home and contain Iranian expansionism abroad, Iran needs to be weakened from within. The international community therefore must engage Iran more effectively inside its borders through pursuing a “periphery strategy,” i.e., supporting the ethnic minorities found in its border regions. This will achieve two goals. First, ethnic minorities would finally enjoy the freedom and human rights they have been deprived of since the early 20th century. Second, this would deprive Iran of human and natural resources it needs to perpetrate its malign expansionism in the Middle East.

An array of democratic ethno-nations in the periphery of Iran would create a “great wall” around the country. This “wall” would stretch from the Kurdish areas of Northern Khurasan to the Persian gulf in the west including Azerbaijan, Kurdistan and Khuzistan as well as Balochistan in the southeast and would limit Iran’s access to the outside world and consequently end its geostrategic importance regionally and internationally.

Eldar Mamedov has written at Responsible Statecraft about what a stupid and reckless idea this is, but again, has that ever stopped the neocons before? For Washington, the Armenia-Azerbaijan tensions are an opportunity to get more of a foothold in the region dominated by Russia. Any conflict would create quite the headache for Moscow as it would be forced to try to balance the interests of not only Armenia and Azerbaijan, but also Iran, Turkiye, Israel and India.

For an inside look at the line of thinking from The Blob we can turn to Michael Doran, director of the Hudson Institute’s Center for Peace and Security in the Middle East. In a recent piece for the Wall Street Journal, he weeps for the suffering of the Azeris, and despite Russia previously providing more of a stabilizing force in the region, Doran blames all the South Caucasus problems on Putin. Here’s Doran writing in the Wall Street Journal:

Mr. Putin also has been hosting talks between Azerbaijan and Armenia, apparently playing at peacemaking while keeping the dispute on a low burn. A true resolution of the conflict would obviate the need for Russian forces in Karabakh, one of his two major tools for forcing Baku to respect his will.

Meanwhile, Russia has an unassailable military position in Armenia, home to at least three Russian bases. Russian soldiers patrol key segments of Armenia’s borders, and Russian military officers entirely control Armenian air space.

By contrast, Azerbaijani President Ilham Aliyev has been remarkably successful at wiggling free of Moscow’s control—more successful than almost all other leaders of former Soviet republics. While fostering strong economic ties with Europe, to which Azerbaijan supplies oil and gas, Mr. Aliyev has simultaneously developed deep and enduring defense ties with Turkiye and Israel.

The ironic aspect of this argument that Russia is fully behind Armenia and bullying around Azerbaijan is twofold:

1. Azerbaijan has enjoyed the overwhelming military advantage in recent years due to support it receives from Turkiye and Israel. Armenia has not enjoyed similar support from Moscow.

2. Armenians have been furious with Russia for its lack of support and for being too accommodating of Azerbaijan. Essentially, Russia has tried to mediate the conflict as even handedly as possible and is now getting criticized from both sides for it.

Not to worry, though; Doran eventually gets around to the whole point of US involvement in the affair:

Mr. Blinken now recognizes that the American track offers the only viable path to coaxing Armenia to make peace and, thereby, limit the forms of cooperation with the Russian-Iranian alliance that threaten U.S. interests.

Washington is freaking out over the burgeoning sanction-busting Russia-Iran relationship and is struggling to find a way to counter. The neocons at the Heritage Foundation sum it up this way:

Considering their regional and global geopolitical ambitions, the deepening strategic partnership between Iran and Russia poses a rising threat to the U.S., its allies, and partners in Europe, Eurasia, and the Middle East. Failing to quickly address these troubling ties—and the multiple threats that arise from them—will only lead to more international instability, including in the war in Ukraine. Washington and like-minded countries urgently need to take steps now to undermine and counter the anti-American Russo–Iranian axis before additional damage is done.

The Zangezur corridor is indeed one area where Moscow and Iran diverge. While Iran views such an initiative as a major threat, Russia is more concerned with maintaining economic ties and transit options with Azerbaijan and Turkiye. Therefore any conflict in the South Caucasus is a win-win for Washington as it could allow the neocons to try out their theory that such a conflagration would destabilize Iran while also potentially creating a rift between Moscow and Iran if they don’t see eye to eye on the solution.

The RAND Corporation, too, has written about how the Caucasus is but one area on Russia’s periphery where conflict would weaken Moscow. With that in mind, officials in Azerbaijan and Armenia should be very cautious accepting help at finding a peace solution from Blinken and company, as peace is the last thing they’re worried about.