Flagship

Netanyahu rejects US plan

Israel’s prime minister rejected calls for a two-state solution and insisted his country was targeting “absolute victory” in its war with Hamas. Benjamin Netanyahu’s opposition to a Palestinian state is long-held, but the remarks’ timing and openness — just a day after the U.S. insisted such a solution was necessary, and with Arab states reportedly circulating a peace plan centered around a two-state framework — undermined hopes of an end to the Gaza war in the short term. They also pointed to the role of Israeli domestic politics in the persistence of the war: Netanyahu is unpopular at home, reliant on the support of far-right coalition partners to retain power, and at risk of losing two prominent members of his broad war cabinet. “Israel needs an early election,” the former Israeli Prime Minister Ehud Barak wrote in Haaretz, “before it’s too late.”

Those domestic calculations have huge implications for the world. The cascading conflict’s strangling of Red Sea shipping routes is threatening to reverse a slowdown in worldwide food-price inflation by forcing ships away from the Suez Canal and around the Horn of Africa. Laborers from as far afield as India are lining up to fill vacancies in Israel, which has banned or heavily restricted the entry of Palestinian workers. One global market that — so far — has been largely unmoved is oil: “There are plenty of shock absorbers to blunt the impact of any short-term disruption stemming from a limited conflict in the Middle East,” a Reuters columnist noted.

Egypt flounders with Red Sea chaos

Houthi attacks on ships in the Red Sea have piled further pressure on Egypt’s beleaguered economy by diverting trade away from the Suez Canal. Revenue from the canal, a key source of income for heavily indebted Egypt, fell by 40% in the first 11 days of the year, Reuters reported. The crisis has also underscored international reliance on the Suez and Panama Canals, through which almost a fifth of global trade passes. The former has been hammered by the war, while the latter is affected by drought. The routes “have few viable alternatives,” the Financial Times’ editorial board argued. “Authorities must invest in the resilience of key trading chokepoints.”

Largest NATO exercise in 30 years

NATO is launching its biggest military exercise since the end of the Cold War, with 90,000 troops from the U.S. and Europe rehearsing defensive strategies against Russia. More than 50 ships, 80 fighter jets, and 1,100 combat vehicles will also be involved. Russia was not directly named, but the Steadfast Defender exercise imagines conflict with a “near-peer” adversary on the alliance’s eastern flank. Russia’s invasion of Ukraine has ended a long era in which NATO felt no need for large-scale defense plans, concentrating on wars overseas such as in Afghanistan. The Ukraine war itself is going nowhere, though: Kyiv plans a strategy of “active defense” in 2024, keeping Russia off balance with smaller counterattacks, and hit St. Petersburg with a domestic-made drone on Wednesday.

Poland overhaul unconstitutional

Poland’s top court ruled that the new prime minister’s overhaul of state media outlets was unconstitutional. The ruling was swiftly dismissed by the government, which argued that the judges making the decision were appointed by Warsaw’s previous leaders and thus biased. The dispute spotlights efforts by the new government to reverse what it calls the undermining of the judiciary and media under Poland’s prior leadership, and has “shown how problematic the … project of elite replacement could be,” one expert wrote in a London School of Economics blog. “Poland is an emerging test case of whether a corrupted democracy can be revived,” a Washington Post columnist noted. “The discouraging early signs are that it might be harder than building one from scratch.”

US avoids shutdown

The U.S. Congress passed a last-minute stopgap bill to fund the federal government until March, which will avert a shutdown if signed by President Joe Biden today. It’s the third stopgap, or “continuing resolution,” extending existing spending levels. The Senate Majority Leader Chuck Schumer, a Democrat, hailed the agreement as “good news for America” which avoided a “needless disaster,” although hardline Republicans disagreed: More than 100 voted against the measure in the House of Representatives, with one calling it a “loser for the American people.” The new House Speaker Mike Johnson, who negotiated the package with Schumer, warned his fellow Republicans that a shutdown would provoke a backlash against his party during an election year.

China stocks plummet

China’s stock markets have fallen sharply to start the year, driven by investor worry over a prolonged economic slowdown and crackdown on private business. The Shanghai stock exchange is down 4.8% in 2024, Shenzhen’s nearly 8%, and Hong Kong’s more than 10% — a sharp contrast from other major global indices which are largely up in 2024. China is grappling with several economic challenges, including a worsening property slump, a mountain of debt, and persistent youth unemployment. “Investors seem to have suffered a cathartic loss of confidence in China,” a Bloomberg columnist wrote.

Brazil courts China investment

Brazilian President Luiz Inácio Lula da Silva will court Chinese investment during talks with Beijing’s foreign minister today. The meeting highlights Latin America’s growing reliance on China not only as an export market but increasingly as a source of foreign direct investment. Chinese FDI stock in Latin America was almost $600 billion in 2022, up from $68 billion a decade earlier. Though China’s investment in Africa sparks widespread worry in Western capitals, its trade with Latin America is far larger, having grown more than 21-fold since Beijing joined the World Trade Organization in 2001, unseating the U.S. as the biggest trade partner to several countries in the region.

Gain a deeper understanding of the global economy by signing up for the Daily Brief from our friends at Quartz. You’ll join over half a million readers who rely on this free newsletter for their essential briefing on what’s happening in the business world every day. Get your insights on everything from generative AI to global trade — sign up for free.

Meta eyes artificial general intelligence

Meta CEO Mark Zuckerberg said his company is trying to build artificial general intelligence. He said he didn’t have a “one-sentence, pithy definition” of AGI, but it is broadly defined as an artificial intelligence that can do all human intellectual tasks. Rivals OpenAI and Google DeepMind have always aimed for AGI, but Meta has been more skeptical. Now, Zuckerberg says the technology will be necessary to build future products: He told The Verge that Meta has been buying more Nvidia AI chips than any other individual company. For now Meta is also sticking to its plan to open-source AI. Zuckerberg hinted that rival companies who prefer closed-source play up the safety risks of Meta’s choice in order to maintain their market lead.

Prize winner written with AI

The winner of the Akutagawa Prize, Japan’s most prestigious book award, said about 5% of her winning entry was written with ChatGPT. Tokyo-to Dojo-to (Sympathy Tower Tokyo), by Rie Kudan, is set in a near future where artificial intelligence is central to society. Judges called it “almost flawless” and “universally enjoyable.” Kudan said at the ceremony that using ChatGPT “unleashed my creativity,” sparking a debate over whether it undermined her achievement. Ai Weiwei, the Chinese artist, philosopher, and dissident, said recently that art which can easily be recreated with AI is “meaningless” — although he is himself collaborating with an AI, in a work called, inevitably, Ai vs AI.

The rise of the Turkish barber

British high streets are increasingly full of Turkish barbers. Barber shops are the fastest-growing sector of the British retail economy, and many of them are branded as Turkish. “While a traditional English barber might give you a taciturn trim,” the Financial Times reported, the Turkish ones offer a full “male grooming ritual.” Almost every town in the U.K. has at least one, despite skepticism from local competitors. Immigrant populations are known for changing a country’s restaurant scene, but the Turkish barber phenomenon has inspired a change in British hairdressing: “Some English barber shops are attempting to rebrand, doubling down on their Britishness as a selling point.”

Semafor’s 2024 World Economy Summit, on April 17-18, will feature conversations with global policymakers and power brokers in Washington, against the backdrop of the IMF and World Bank meetings.

Chaired by former U.S. Commerce Secretary Penny Pritzker and Carlyle Group co-founder David Rubenstein, and in partnership with BCG, the summit will feature 150 speakers across two days and three different stages, including the Gallup Great Hall. Join Semafor for conversations with the people shaping the global economy.

• Hundreds of German truckers are expected to stage a protest in Berlin against a toll increase.
• Jordanians protest in the capital Amman in support of Palestinians in Gaza as they call for a ceasefire.
• U.S. punk-rock band Green Day release their 14th studio album, Saviors.

Each Friday, we’ll tell you what a great bookstore suggests you read.

London’s Daunt Books recommends The Man Who Loved Siberia, Roy Jacobsen and Anneliese Pitz’s account of one man’s 22 years in Siberia during which he “climbed mountains, traversed great rivers, explored remote islands and crossed treacherous lakes of ice, always with one purpose: to enhance our knowledge of the natural world.” Buy it from Daunt, or your local store.

A Kyiv-born conductor and a U.S. violinist are reviving a largely forgotten Ukrainian concerto. The 1943 work by composer Thomas de Hartmann will be performed with a Ukrainian orchestra as part of a concert in Warsaw this month. “As long as we keep playing Ukrainian music, then it cannot now be destroyed,” conductor Dalia Stasevska, whose family fled the Soviet Union for Finland when she was a child, told The Guardian. The performance comes as Ukraine nears two years of Russia’s full-scale invasion. One of the orchestra’s horn players, Maryan Hadzetskyy, remains missing in action.

• Why an impeachment of U.S. Homeland Security Secretary Alejandro Mayorkas would be low on drama.
• Big Oil is getting bigger — and that may actually be good news for the climate.
• Online piracy surges as viewers battle “subscription fatigue.”