Today’s briefing:
— The Philippine dilemma
— Holding breath for possible Iran-US talks
— Why cocoa demand never recovered
Good morning {{first_name | Intriguer}}. I’ve loved malapropisms ever since I learned about them the hard way by publicly exhorting a downcast friend not to self-defecate.
The great and the good have long entertained us by reaching for the right word… then grabbing the wrong one, like Treasury Secretary Bessent casually referring to the world’s most critical energy artery as the ‘Strait of Vermouth’. So close!
But he’s in good company. I don’t just mean me, nor even the original Mrs Malaprop (“the very pineapple of politeness”), but the Great Bard himself, who perfected the malapropism via his Constable Dogberry character, boasting he “comprehended two auspicious persons”.
My point? Today’s edition (if not history) hinges on whether the Philippine president really meant what he just said. Shall we dive in?
Number of the day
$21.9B
That’s the value of China’s EV and solar exports last month according to Ember data — up 70% yoy! The Hormuz energy crunch is part of that story, but China’s exporters also frontloaded their sales to take advantage of subsidies that expired from 1 April.
Guarding a chokepoint
Whether it’s via DC’s IMF Spring Meetings or your paper’s international pages, there’s one region sounding the loudest energy alarm since the Iran conflict began — Southeast Asia.
And while it’s all been a little lost in the US-Iran media shuffle, it’s worth taking a look at some veeeery intriguing developments in the Philippines, starting with…
Energy
The Philippines imports ~98% of its crude, and nearly all from the Middle East.
So with the Iran war squeezing Hormuz, and Manila sitting on barely 45 days of reserves (half the IEA guide), it made sense for President Marcos Jr to declare an emergency as local fuel prices doubled amid ~$10 daily minimum wages.
He’s also now a) pushed for US waivers to buy Russian oil, b) allowed dirtier fuels, and c) implemented a four-day work week for government employees… which government employees will insist just means longer hours across four days, not a free day off. Right?
But what really caught our attention was his hint about potentially reopening fraught talks with China on joint oil exploration in the South China Sea, which takes us to…
Trade
The Philippines sits right on the South China Sea, which hosts a ~quarter of global maritime trade, 40% of global seaborne crude, and ~80% of China’s crude imports.
So this is some serious real estate, which might explain why China still lays claim to 90% of the Sea via its infamous ‘9-dash line’, rejected as unlawful in a landmark 2016 case.
It might also explain why the rest of the region (and the US) has pushed back — few like the idea of Marxist-Leninists controlling their chokepoint, let alone annexing islands 1,000km from China’s mainland. And ditto, Beijing dislikes the idea of not controlling it all.
So… the Marcos administration has now…
Accused China-based fishermen of dumping cyanide near a Philippine outpost
Opened a new coast guard command center on its disputed Thitu Island, and
Renamed 100+ maritime features claimed by China.
He also just joined the US-led Pax Silica initiative, announcing a vast new AI-native Economic Security Zone (aka come invest here).
How to square all this hardball with Marcos Jr's remarks about re-opening China talks… to jointly explore waters he clearly insists aren’t actually ‘joint’? It’s all about…
Security
If you read through Manila’s South China Sea statements, you’ll see the word “sovereignty” sprinkled like a Salt Bae steak. That might explain why the Philippines and its US allies just launched their annual Balikatan (Shoulder-to-Shoulder) exercises, featuring…
A record 1,400 Japanese troops (10x last time), who’ll…
Use Japan’s own anti-ship tech to sink a decommissioned ship, and
It’s all happening closer than ever to Taiwan and disputed South China Sea zones.
It’s about making China think twice before yoinking more South China Sea islands or even Taiwan, while also signalling that a) Japan is no longer just a passive observer, b) the region is no longer fully reliant on US kit, and c) the US isn’t so stretched by Iran.
But all that to say we’ve now got Manila verbally hinting one thing (South China Sea flexibility) while practically demonstrating another (South China Sea hardball).
Which to believe? Here’s a hint: Marcos Jr’s ‘joint exploration’ rhetoric will have pleased Beijing, but any action is way in the distance beyond some big political and constitutional hurdles.
So here’s the big signal among all the noise: squeezed between an energy shock and US-China rivalry, Manila is making political (if still hollow) overtures to keep Beijing happy, while doubling down on a 74-year-old US security pact.
Intrigue’s Take
Two obvious questions here are a) how long Manila will keep making that bet, and b) how many other US allies in the region will continue to follow.
Manila’s last China-friendly Duterte presidency is a reminder these questions are hardly theoretical. Rather, they come down to the relative appeal of each offer:
China’s offer now includes unfulfilled investment promises, regular economic coercion, and vast claims on others’ turf, all while declining to meaningfully tap its own vast oil reserves to ease the region’s energy crunch, while…
America’s record now includes tariffing, criticising, and even threatening its own allies, while also side-lining them in a war decision that’s now triggered the very energy squeeze we explore above.
So given neither option looks particularly elegant right now, you might assume US allies in the region would hedge a little more, rather than double down on the US. But some seem to have calculated that their longer-term security and prosperity depends on a stable balance of power, which they still assess only exists if the US remains engaged.
That’s why you’ll see more Indo-Pacific allies sign onto US ideas like Pax Silica, swallow US tariffs, and ignore US slights. It’s not because they’re weak or foolish, but because they’ve calculated that in the midst of an assertive China, a volatile America is still better than an absent America.
Sound even smarter:
The Balikatan drills run until May 8, with 17,000 personnel from seven nations: the Philippines, the US, Australia, Japan, Canada, France, and New Zealand.
In a reminder of the country’s domestic challenges, Philippine troops also killed a dozen communist insurgents over the weekend.
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Meanwhile, elsewhere…
🇮🇷 IRAN - Schrödinger's talks.
Amid mixed signals on whether Iran even plans to show, VP Vance is reportedly preparing to travel to Pakistan today (Tuesday) for the second round of US-Iran talks. The 14-day ceasefire theoretically expires tomorrow night, and Trump’s latest tweets start to pre-sell a deal he insists will be better than Obama’s JCPOA. (AA)
Comment: It’s tough to read too much into any single presidential tweet, but critics will note (and markets might cheer) Trump’s tweet makes zero mention of zero enrichment for Iran, hinting at the *possibility* of US flexibility towards what has been a red line to date. But the continued US military buildup also just hints at the possibility of further escalation ahead. We explored the latest here.
🇺🇸 UNITED STATES - Apple dance.
Tech giant Apple has announced CEO Tim Cook will step down in September after 15 years at the helm, with Apple’s long-time hardware SVP John Ternus taking over. (CNBC)
Comment: Amid Apple’s AI lag and supply chain disruption, the board is signalling continuity of Cook’s operational focus via this insider transition (and keeping Cook as exec chair), while signalling it still sees the firm’s future in great physical products.
🇷🇺 RUSSIA - It’s just a flesh wound.
Swedish military intelligence is claiming the Kremlin is systemically faking its economic data to convince the West its wartime economy is holding up fine — the Swedes suggest Russia’s real inflation is triple the claimed 5%. (FT $)
Comment: Here’s some empirical data for you: for the first time in a ~quarter century, Putin has sold significant gold bullion directly into the market. It’s only 1% (22 tonnes) of his reserves, but it’s barely papered over 5% of his yawning fiscal deficit. It could also be a way to create ruble liquidity given sanctions have left him sitting on huge piles of yuan.
🇬🇧 UNITED KINGDOM - Tense times.
Beleaguered leader Keir Starmer has admitted to unknowingly misleading lawmakers by claiming his pick for US ambassador, Epstein associate Peter Mandelson, had cleared “full due process”. Starmer argues he didn’t know Mandelson had actually failed background checks not just over his Epstein links, but also his links to Russian and Chinese business interests. (BBC)
Comment: To give a sense how this never-ending story is pushing Starmer’s already unpopular government to the brink, consider this spicy anonymous quote one of his own party members just gave to Politico: “Lots of people think Keir Starmer is a good man who is out of his depth. Wrong. He’s an a$$hole who’s out of his depth.”
🇰🇷 SOUTH KOREA - Trip for chips and ships.
President Lee is in India on a three-day trip, seemingly trying to sign as many MoUs as possible. During his meeting with Indian PM Modi, the two already agreed to deepen cooperation across chips, shipbuilding, and critical minerals, while aiming to double trade by 2030. (TOI)
Comment: Why? The above priorities already give the economic game away: he’s trying to de-risk his economy away from China. There’s also a security dimension: he’ll hope investing in his India ties helps balance China’s regional influence without directly confronting Beijing.
🇮🇳 INDIA - Modi’s bill fails.
The ruling BJP nationalists have failed to advance a bill promoting female representation in parliament, amid claims it’s just a cover to re-draw electorates. (Guardian)
Comment: This is a rare loss for PM Modi and his party, who’ve seen all their constitutional amendment propositions succeed over the past 12 years.
🇨🇦 CANADA - Times have changed.
Prime Minister Carney has used a national address to warn that “many of our former strengths, based on our close ties to America, have become weaknesses.” His comments come as the US-Mexico-Canada trade pact (USMCA) kicks off its highly-anticipated review — US-Mexico talks are now underway in Mexico, with US-Canada talks due May or later. (Global News)
🇪🇹 ETHIOPIA - On the war path.
The Tigray People's Liberation Front (TPLF) has announced it’s retaking Ethiopia’s Tigray region, voiding the treaty that ended Ethiopia’s civil war in 2022. The group has a list of grievances, but the immediate trigger seems to have been Ethiopia’s move to unilaterally extend an unpopular interim Tigray administration. (Reuters)
Comment: We wrote about Ethiopia’s overlapping conflicts — and the real risk of escalation — here.
Extra Intrigue
Intrigue’s commodities corner is back
Gold: Prices dipped on Monday as investors weigh the inflationary pressures from Hormuz, lowering the appeal of non-yielding gold.
Copper: Peru has reauthorised the long-delayed $1.8B Tía María open-pit project, reversing a brief procedural halt amid continued local opposition.
Cocoa: Demand for cocoa still hasn’t recovered from the wild volatility of 2024, despite huge drops in prices. That’s demand destruction 101.
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Mascot of the day
Credits: Briciola_mascotte via Instagram.
Everyone, meet the official mascot of the Italian military police. No, we’re not talking about the well-groomed stallion, nor the horse carrying him (hah).
Lower your gaze and you’ll see a tiny pup aptly named Briciola (crumb) — she’s held the rank of vice-brigadier since her 2014 adoption by Italy’s 4th mounted regiment.
Her handler is careful to specify she isn’t deployed in the field, though Briciola follows in the paw-steps of several furry predecessors, long regarded by Italy’s Carabinieri as symbols of fealty and good luck.
Extra fun fact: A few years ago, Briciola famously welcomed Italian President Mattarella with an unprompted roll on the red carpet.
Today’s poll
Do you think the US is still a reliable ally in the South China Sea?
Yesterday’s poll: What do you think is most likely before this US-Iran ceasefire expires Wednesday night?
🖊️ A meaningful US-Iran deal (2%)
🚀 A military escalation (49%)
🌮 A TACO (Trump always chickens out) (47%)
✍️ Other (write in!) (1%)
Your two cents:
🌮 J.B: “He can't afford the political backlash in USA if he escalates and the resultant further negative impact on the world economy (including the USA).”
🚀 K.M: “He needs to back up the bravado. Brace yourselves.”
✍️ L.Z: “How about a deal that is an un-meaningful extension to give both sides more time to stall for a miracle?”