Netanyahu dissolves war cabinet

Good morning. Here's what happened overnight and what you need to know today.

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1.

Cabinet dissolved: Israeli Prime Minister Benjamin Netanyahu has dissolved the country’s six-member war cabinet formed after Hamas’s October 7 attack, following the resignations of two key centrist members, Benny Gantz and Gadi Eisenkot. Netanyahu will now consult with a smaller group of ministers, including defence minister Yoav Gallant and strategic affairs minister Ron Dermer, on the Gaza war. Ultranationalist coalition partners, finance minister Bezalel Smotrich and National Security Minister Itamar Ben-Gvir, had sought inclusion in the war cabinet, which could have strained international relations, particularly with the US. The war cabinet was initially formed when Gantz joined Netanyahu in a national unity government in October, also including Gadi Eisenkot and Aryeh Deri as observers. Gantz and Eisenkot left the government last week, citing Netanyahu's lack of a clear strategy for the Gaza war. (Reuters) (Financial Times)

2.

Sea bump: China and the Philippines have exchanged accusations over a collision in the South China Sea, with Manila vowing to resist Beijing's actions in the contested waters. China's coastguard on Monday accused a Philippine supply ship of "deliberately and dangerously" approaching a Chinese vessel near Second Thomas Shoal. They claim it was an illegal intrusion that resulted in a minor collision. The Philippines rejected these accusations, with officials saying Chinese vessels had been “ramming and towing”, putting lives at risk and causing damage. In a social media post, US Ambassador MaryKay Carlson called China's actions "aggressive and dangerous," adding the collision had resulted in "bodily harm." Manila's defence minister, Gilberto Teodoro, condemned China's actions as roadblocks to peace. The Philippines refers to the disputed waters as the West Philippine Sea, while China is enforcing new rules, effective 15 June, enforcing a 2021 law allowing its coastguard to use deadly force against foreign ships in waters it claims. (Reuters)

3.

Green light: EU ministers have passed the Nature Restoration Law that mandates the bloc’s countries to preserve 20% of its land and seas, despite fierce opposition from conservative, right-wing, and farming groups. While vital to the EU’s green agenda, it faced strong criticism from business groups amid waning support for the bloc’s climate policies. Poland, the Netherlands, Sweden and Finland opposed it. Austria had planned to abstain, but a last minute change-of-heart by green climate minister Leonore Gewessler helped give the final approval. That led to fury in Vienna from the country's Chancellor, Karl Nehammer, who called the vote unlawful and threatened legal action. “Today’s decision is a victory for nature,” Gewessler said on X after the vote. “My conscience tells me unmistakably [that] when the healthy and happy life of future generations is at stake, courageous decisions are needed.” Belgian officials who hold the rotating EU presidency confirmed the binding nature of Gewessler’s vote, dismissing Austria's internal dispute as irrelevant. (Financial Times) (The Guardian)

4.

Scroll warning: US Surgeon General Dr Vivek Murthy urged Congress to mandate warning labels on social media platforms, similar to those on cigarette packages, to alert parents about mental health risks for adolescents. In an open letter published in The New York Times, Murthy compared social media dangers to those of unsafe cars or contaminated food. He noted current platform designs exploit developing brains, leading to overuse, and said labels would regularly remind parents that social media is associated with significant mental health harms for adolescents. “In an emergency, you don’t have the luxury to wait for perfect information. You assess the available facts, use your best judgment, and act quickly,” Murthy wrote. “The mental health crisis among young people is an emergency — and social media has emerged as an important contributor.” Labels alone won't solve the issue but are a crucial step, he said. About 95% of teens use social media, and over a third engage "almost constantly," according to 2022 data from the Pew Research Center. (New York Times) (Murthy’s open letter)

5.

Bacon block: Beijing has launched an anti-dumping investigation into EU pork imports, escalating trade tensions shortly after the EU announced anti-subsidy tariffs on Chinese electric vehicles. China's ministry of commerce said the probe will scrutinise 2023 imports, primarily affecting Spain, the Netherlands, Denmark, Germany, and Belgium, and may extend beyond a year. The China Animal Agriculture Association claimed the EU has flooded China with cheap pork, harming local industries and farmers. The EU agricultural body disputes the anti-dumping claims but must participate in the costly investigation. Spain, the leading pork supplier to China, has pledged full cooperation. Denmark's pork sector faces significant impact if restrictions are imposed, while suppliers from South America, the US, and Russia may benefit. The move is seen as a tactic to pressure individual governments to force the European Commission to scrap EV tariffs before they are confirmed by 4 July. Those tariffs could be blocked if 15 states vote against them. Recent figures show a decline in EU pork exports to China from 3.2 million tonnes in 2020 to 1.34 million in 2023. (Financial Times) (Reuters)

6.

Debt talks: Ukraine is urging bondholders to accept significant cuts on over USD20 billion ($30 billion) in debt, to secure continued IMF support and aid its war effort. Major institutional investors, holding about one-fifth of Ukraine’s eurobonds, recently rejected a proposal to reduce bond values by up to 60%. The current suspension of payments, granted after Russia's 2022 invasion, ends in August. Finance Minister Sergii Marchenko expects an agreement before the deadline. “Strong armies must be underpinned by strong economies to win wars,” Marchenko said in a statement. “As we approach the deadline, we must urge our bondholders to continue productive and good-faith negotiations, with more substantial debt relief” that can meet IMF targets. Ukraine seeks over USD5 billion in debt relief over the year to cover a projected USD43 billion budget deficit, funded partly by IMF loans and international support. It is proposing new bonds with symbolic interest until 2027 and performance-based securities. Bondholders, whose counterproposal of a 22% cut was deemed insufficient by the IMF, are seeking higher initial interest and recovery options. The negotiations follow a G7 pledge of USD50 billion in loans from frozen Russian assets last week. (Ukraine statement) (Financial Times) (Reuters)

7.

Oil & ammo: Russian President Vladimir Putin will visit North Korea on Tuesday for a two-day trip, his first visit to Pyongyang in over two decades. The two countries have strengthened their military and economic ties in recent months. Putin’s first visit to the country in 24 years follows the reported delivery of millions of North Korean artillery shells to Russia for its war in Ukraine and Moscow's provision of oil to Pyongyang, in defiance of UN sanctions. Both nations have denied North Korean arms exports. Putin is expected to meet North Korean leader Kim Jong Un to discuss further cooperation amid rising international concerns about an arms arrangement between the countries that could violate UN Security Council resolutions. (Associated Press) (CNN)

8.

Borsa turmoil: Italy’s banking sector trade unions have called for the first-ever strike at Borsa Italiana, following accusations of significant divestments from the country by Euronext, the national stock exchange's owner. Unions Fabi, First Cisl, and Fisac Cgil claim Euronext's actions are systematically stripping Italian operations and fear job cuts. The strike is scheduled for the last two hours of the trading day on 27 June and is expected to be followed by additional protests. Euronext, which acquired Borsa Italiana in April 2021 for €4.3 billion ($7 billion), denies the allegations and has called for constructive dialogue. It has created over 100 jobs in Italy in the past year and invested in training and bonuses, the company added. The unions are also demanding wage increases of €400-600 per month. The strike is expected to impact trading in Italy on the day. (Reuters)