News from Somaliland, Boeing, and South Africa

Somaliland’s agreement to lease coastal territory at the tip of the Red Sea to Ethiopia will help “secure freedom of navigation”for international shipping,The Financial Times reports, citing statements by Somaliland President Muse Bihi Abdi. The January agreement allows Ethiopia to establish a military base and host commercial ships on the territory in exchange for its recognition of Somaliland, ending its reliance on Djibouti for maritime access. Ethiopian military assets on the strip will also help deter Houthi-led attacks against shipping in the Red Sea, Bihi Abdi said.

Somalia isn’t happy: Somalia has opposed the agreement, with Somalia’s president indicating that “not an inch” of its land will be taken away due to the accord. The US, EU, Arab League, and Egypt have also expressed reservations about the arrangement, the FT added.

Boeing’s delivery delays are not likely to improve in Q2 with expectations rising for cashflow burn as it struggles to combat production challenges, CNBC reports, citing comments made by CFO Brian West. The firm spent almost USD 4 bn in cashflow in Q1, with Q2 forecasted to be similar or “possibly a little worse,” according to West. Boeing’s plane deliveries dropped to its lowest level since the pandemic in Q1, Bloomberg said. The manufacturer is looking to “stabilize [their] production system, improve quality, and get more predictable,” West said. This comes ahead of the company’s meeting with the US Federal Aviation Administration (FAA) this Thursday, where it will present its plan to boost quality control.

More woes for Boeing: Boeing could face criminal prosecution in the US due to breaching a 2021 agreement protecting the company from criminal charges over two fatal 737 Max plane crashes in 2018 and 2019 that resulted in 346 fatalities.

South Africa is considering filing a formal complaint with the World Trade Organization (WTO) over the European Union's “protectionist” carbon border tax, Reuters quoted South African Trade Minister Ebrahim Patel as saying last week. The EU’s proposed carbon adjustment mechanism (CBAM) will impose charges on imports of carbon-intensive goods such as steel, cement, aluminum, fertilizers, electricity, and hydrogen starting 2026. South Africa feels the CBAM would penalize developing nations struggling to raise large investments needed to reduce their CO2 emissions, Patel told the outlet. “Instead of recognising differential levels of development, it imposes a one-size fits on all firms across the world,” Patel said, though he added that South Africa is willing to “reach agreement through engagement and negotiation and our door remains open to find a settlement with the European Union on this matter.”