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Regional Summary

No Plan for This The Hormuz closure has done what years of Chinese military pressure could not: it is forcing governments across the Asia-Pacific to choose between alliance solidarity and economic survival, and several are quietly choosing the latter. Washington’s security umbrella was designed for a different era — not for a world in which the oil route that powers Asia can be shut by a country the alliance is fighting. What this week reveals is not a region fracturing dramatically but something more durable: a region improvising, each government on its own, without any shared plan and with little confidence that their American patron will hold. Japan’s response is the starkest. The Self-Defense Forces reportedly fired a Type 88 anti-ship missile on Philippine soil in Ilocos Norte — the first time Japan has fired a combat missile on foreign territory since the Second World War — while Shinjiro Koizumi, the defence minister, watched alongside his Philippine counterpart. Within the same week, Mitsui & Co, Mitsui O.S.K. Lines, and likely Mitsubishi are set to send a business delegation to Moscow on May 26 to open post-war economic talks, and Japan imported Russian crude oil for the first time since the Hormuz closure. As recently as early April, the cabinet had denied any such delegation was planned. The reversal reflects a simple calculation: Japan imports almost all its oil, the strait is closed, and G7 solidarity does not fill a tank. The missile and the Moscow mission are not contradictory — they are two responses to the same emergency, pointing in opposite directions because the emergency has no clean solution. Taiwan’s predicament is different but equally revealing. Its legislature passed a defence bill worth 62% of what the executive had sought — excluding integrated air defence, domestic drone development, and efforts to remove Chinese components from defence manufacturing — after a 162-day standoff in which a Kuomintang–Taiwan People’s Party coalition held firm and three Letters of Offer and Acceptance expired. A US intelligence source told reporters that Beijing had worked to suppress the budget and had partly succeeded. Meanwhile, Taiwan watched the summit between the American president and Xi Jinping in Beijing approach — a meeting at which it has no seat — with Tsai Ming-yen, the director-general of the National Security Bureau, publicly warning that Beijing might manoeuvre on Taiwan during the talks. For an intelligence chief to signal publicly that he cannot predict his own patron’s behaviour is extraordinary. South Korea felt the same contradiction more quietly: Seoul described the Hormuz strike on the Korean-operated vessel HMM Namu (Hyundai Merchant Marine) as involving an “unidentified aircraft” — not the American president’s description of an attack on a Korean vessel — and the gap immediately revived the controversy over US intelligence-sharing. The common thread is not hostility to Washington but the discovery, in real time, that the alliance leaves more room for divergence than anyone advertised. The further from the front line, the more the improvisation looks like a lasting shift. Australia announced a $10.7 billion fuel-security package — government reserves, loans, and equity guarantees — after the Hormuz closure exposed its supply vulnerability, while Richard Marles, the deputy prime minister, confirmed that Washington had not asked for Australian naval support in the strait. Penny Wong, the foreign minister, finalised the Vuvale Union with Fiji, the fourth security pact Australia has signed with a Pacific island since 2023; China, meanwhile, is close to finalising a rival deal in Vanuatu, a competition Canberra appears to have lost partly through the bribery of local politicians. Indonesia’s Prabowo Subianto, fresh from the ASEAN summit in Cebu, promised his country would soon be self-sufficient in fuel, requiring no more imports — while offering no mechanism and while Pertamina, the state energy company, was selling fuel at a loss with oil above $110 a barrel. None of this amounts to Asian realignment. Japan is exercising with the Philippines, Canada, France, and New Zealand; South Korea’s balancing act gained legitimacy when both Washington and Beijing accepted Korean soil for their trade talks; Taiwan is embedding itself in European defence supply chains through drone exports that surged more than 40-fold in 2025. But each of these moves is a bilateral hedge, not a shared plan. When the next shock arrives — another closed strait, another summit where Taiwan has no seat — governments will face the same improvisation problem, and the workarounds will still be pointing in different directions. The Hormuz closure has not broken the American alliance system in Asia; it has shown that the system never had a plan for the test it is now running.

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Country Summaries

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Taiwan flag Taiwan

Taiwan’s legislature ended a 162-day standoff by passing a NT$780 billion defense bill — and Washington called it a concession to China. The bill, passed 59-0 with 48 abstentions on May 8, amounts to 62.4% of the NT$1.25 trillion the executive had sought. The Kuomintang (KMT)–Taiwan People’s Party (TPP) coalition delivered the result. But the bill excluded the Taiwan Dome integrated air defense program, domestic drone industry development, and initiatives to remove Chinese components from defense manufacturing. Three Letters of Offer and Acceptance had already expired during the standoff; the High Mobility Artillery Rocket System (HIMARS) purchase faces cancellation unless Taiwan pays by the end of May. A senior US official told reporters on background that “there was some stuff left on the cutting room floor that we believe still needs to be funded” — and an intelligence source went further, saying the People’s Liberation Army’s (PLA’s) assessment that Washington’s “hellscape” deterrence strategy would thwart any invasion had directly shaped Beijing’s effort to suppress the budget. China worked to block Taiwan’s defense bill and partly succeeded. That finding arrived as Taiwan braced for the May 14-15 Trump-Xi summit in Beijing — a meeting at which it has no seat. Tsai Ming-yen, the National Security Bureau’s director-general, publicly warned that Beijing may attempt “maneuvering” on Taiwan during the talks. The Guardian listed Taiwan, trade and Tehran as the summit’s three main danger areas. François Wu, the deputy foreign minister, was blunter: “What we are most afraid of is to put Taiwan on the menu.” For an intelligence chief to publicly signal uncertainty about his own patron’s behavior at a bilateral summit is extraordinary. China reinforced the pressure from another direction: PLA aircraft crossed the median line into Taiwan’s air defense identification zone on both Saturday and Sunday — 8 of 8 sorties on Saturday, 9 of 12 on Sunday — a pattern consistent with Beijing timing military pressure to diplomatic moments. Even as it watched the summit approach, Taiwan worked to strengthen other relationships. Santiago Peña, Paraguay’s president, arrived in Taipei on May 8 for a four-day state visit with a 21-gun salute — one day after China’s foreign ministry publicly urged Asunción to “come to the right side of history.” Mr Peña went beyond diplomatic formality, calling the Taiwan-Paraguay partnership “structural and long-term,” directly invoking Taiwan’s right to self-determination, and criticizing its exclusion from the UN as “unfair.” The two governments signed an agreement on AI computing investment. He also conveyed his views to Asfura, Honduras’s newly elected president, prompting speculation about a potential re-recognition from Tegucigalpa. China applied maximum-visibility pressure; an ally responded with maximum-visibility defiance. Lai Ching-te, the president, had returned to Taoyuan on May 5 from his Eswatini state visit, having navigated China’s airspace denial through a near-maximum-range southern Indian Ocean route and an “arrive then announce” approach that denied Beijing the chance to disrupt his travel. The visit produced a customs agreement, a joint communiqué, and progress on a strategic oil reserve facility and industrial park — Mr Lai described the latter as “the largest and most strategically significant cooperation projects since establishment of diplomatic relations.” At the airport he credited Japan explicitly: Tokyo had publicly stated that aviation safety was “a major issue in the common interest of the international community,” putting itself on record as a defender of Taiwan’s travel rights. Taiwan’s drone exports to Europe, meanwhile, had surged more than 40-fold in 2025 according to a Guardian investigation, with Poland and Czechia as the largest markets and most drones intended for onward transfer to Ukraine; exports in the first quarter of 2026 already surpassed the whole of 2025. Taiwan is now embedded in European defense supply chains through a proxy route it never needed to announce. In the legislature, the defense budget vote exposed fractures in the KMT’s coalition. Jaw Shaw-kong, the KMT’s former vice-presidential candidate, publicly attacked Cheng Li-wun, the party chair, on Facebook, accusing her of “one-party state” centralization and warning that the NT$780 billion figure would yield a “small dividend.” He claimed to have tried to broker a higher figure by drawing together positions from across the party, but said the establishment had “mobilized various forces to attack from all sides.” The South China Morning Post reported deeper tensions between the deep-blue Cheng faction and legislators from more moderate constituencies — the sharpest public split in the party’s leadership since Ms Cheng’s election as chair in October 2025. A Brookings Institution survey found independent voters — Taiwan’s largest and fastest-growing partisan group — split 60-40 in favor of Ms Cheng’s recent meeting with Xi Jinping, complicating the Democratic Progressive Party’s (DPP’s) plan to make November 2026 local elections a referendum on sovereignty. The opposition also voted down Mr Lai’s nominee for prosecutor-general, Hsu Hsi-hsiang, continuing the pattern of blocking the president’s judicial nominees; an acting appointee will fill the role until Mr Lai nominates again. TSMC applied for government approval to build an angstrom-class wafer fab at Longtan in Hsinchu Science Park, estimated at NT$500-600 billion — its next generation beyond the current 2nm node, planned for Taiwan rather than Arizona. The chip maker also signed a non-binding agreement with Sony Semiconductor Solutions for a Japan-based joint venture targeting image sensors for automotive and robotics AI, its second such joint venture in Japan. Reports of a preliminary Apple-Intel chip manufacturing deal circulated, brokered in part by the Trump administration. Taiwan’s semiconductor analysts said TSMC’s packaging and yield advantages would hold for flagship chips in the near term; Apple, they said, is responding to capacity constraints driven by AI demand, not shifting preference.
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Opposition-controlled legislature passes NT\$780B defense bill, cutting Lai's request by 38%; US expresses disappointment and concern
May 4–10, 2026
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Lai completes Eswatini state visit after China-linked airspace denials forced southern Indian Ocean detour
May 4–8, 2026
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TSMC reports record April revenue up 17.5% year-on-year as AI demand sustains semiconductor boom
May 8–9, 2026
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TSMC and Sony Semiconductor announce joint venture to develop next-generation image sensors in Japan
May 8–10, 2026
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Paraguay President Pena visits Taipei, reaffirms diplomatic ties as China pressures Asuncion to switch recognition
May 8–9, 2026
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TSMC investment and manufacturing footprint expands in US, with Arizona fab showcased and further expansion signaled
May 5–10, 2026
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Apple reaches preliminary agreement with Intel for chip manufacturing, reducing dependence on TSMC
May 10, 2026
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China NSB Director warns Beijing may seek 'maneuvering' on Taiwan at Trump-Xi summit; Taiwan watches closely
May 7–10, 2026
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Cheng Li-wun KMT-CCP summit and cross-strait positioning draws public attention; polling shows partisan divide
May 6–10, 2026
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PLA aircraft and vessels conduct sustained incursions across Taiwan Strait median line over multiple days
May 8–10, 2026
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TSMC stock and investment analysis: multiple outlets project continued growth on AI demand
May 4–10, 2026
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TSMC seeks government approval for angstrom-class advanced fab at Hsinchu Science Park's Longtan campus
May 04, 2026
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Taiwan emerges as alternative drone supply chain partner for Ukraine as China-linked components face restrictions
May 06, 2026
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NSB considers deeper Taiwan-Japan security coordination on undersea cables, gray zone tactics, and cyber threats
May 9–10, 2026
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Danjiang Bridge inaugurated in New Taipei; world's longest single-mast asymmetric cable-stayed bridge
May 09, 2026
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Lai awards top diplomatic honor to former DPP US office director Michael Fonte for Taiwan-US relations work
May 06, 2026
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Israeli Knesset delegation visits Taiwan; China warns of 'red lines'
May 08, 2026
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NSB flags Chinese mapping app AMap for sending user data to China servers; nine of fifteen cybersecurity checks failed
May 06, 2026
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Legislature rejects Lai's prosecutor-general nominee Hsu Hsi-hsiang
May 05, 2026
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Legislature passes KMT-backed nurse-to-patient ratio bill
May 09, 2026
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KMT asks Public Television Service chair to leave legislative committee, citing expired term
May 08, 2026
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DPP and KMT clash over Taipei's rodent infestation problem
May 05, 2026
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TSMC taps offshore wind power to address energy crunch from AI chip manufacturing demand
May 07, 2026
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TSMC CoPoS panel-level packaging pushed with exclusivity to extend AI semiconductor manufacturing lead
May 08, 2026
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TSMC Global subsidiary acquires US\$42.3 million in fixed-income securities
May 07, 2026
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TSMC Kumamoto presence exacerbates local traffic congestion; public-private cooperation sought
May 08, 2026
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Other

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Japan flag Japan

Japan fired a combat missile on foreign soil for the first time since the Second World War while preparing to send a business delegation to Moscow — two moves that look contradictory but trace back to the same source: the Hormuz closure that severed Japan’s oil supply lines and is forcing choices Tokyo would rather not make. The missile was deliberate theatre. Inside the Balikatan 2026 exercises, some 1,400 Japanese troops joined American and Philippine forces as the Self-Defense Forces fired a Type 88 anti-ship missile on Philippine soil in Ilocos Norte — targeting a decommissioned Philippine naval vessel — with Shinjiro Koizumi, the defence minister, watching alongside his Philippine counterpart. The missile has a range of roughly 180km. Under the Philippines Reciprocal Access Agreement, now formally in force, the deployment is legally routine; Japan also announced it is considering transferring Abukuma-class destroyers and TC-90 aircraft to Manila. Canadian, French, and New Zealand forces participated for the first time, turning what was once a bilateral drill into a coalition exercise. The same week, Japan confirmed that the recent Maritime Self-Defense Force transit of the Taiwan Strait was the fifth since September 2024 — faster than before. China responded with “joint readiness patrols” in the East China Sea, and two naval vessels were detected 60km off Yokoate Island on a route that deviated from the usual Miyako Strait passage. Tokyo filed a formal protest over China’s installation of a new structure on the equidistance line in the East China Sea. Japan is also weighing whether to formally label China a “threat” in December’s security document revision — a step that would go beyond the “unprecedented challenge” language of 2022. Yet even as it projects military power toward the South China Sea, Japan is reaching toward Moscow. Mitsui & Co, Mitsui O.S.K. Lines, and likely Mitsubishi Corp are set to meet Russia’s Ministry of Industry and Trade on May 26 to open post-war economic talks. Japan has also imported Russian crude oil for the first time since the Hormuz closure. As recently as early April, the chief cabinet secretary and Toshimitsu Motegi, the foreign minister, denied any such delegation was planned. The reversal reflects a simple calculation: Japan imports nearly all its oil, the strait is effectively closed, and energy needs are openly overriding G7 solidarity. The logic is familiar — the late Shinzo Abe held 27 meetings with Vladimir Putin — and it is reasserting itself under crisis conditions. Muneo Suzuki, a lawmaker with longstanding Moscow ties, visited and returned with word that Russia would welcome foreign ministerial talks. This visible break with G7 policy is playing out while Japan tends the other relationships. Scott Bessent, the US Treasury secretary, arrives in Tokyo on May 12 for three days of meetings with Takaichi, Satsuki Katayama, the finance minister, and Kazuo Ueda, the Bank of Japan governor — before flying to Beijing for a summit between the American and Chinese presidents. The sequencing matters: Washington is consulting Tokyo before that meeting, treating Japan as a partner rather than a bystander in US-China economic relations. The agenda covers yen weakness, the war’s effect on markets, and critical minerals. Separately, Takaichi is planning a visit to South Korea around May 19-20 — her third meeting with Lee Jae-myung, South Korea’s president, since taking office — focused on energy security, critical minerals, and trilateral talks on North Korea and China. At home, the contradictions are harder to manage. Japan saw its largest anti-war protests in at least a decade — crowds gathering in Tokyo rain, with protesters in their 20s and 30s standing alongside the elderly, opposing arms export liberalisation, missile deployments, and constitutional revision. The BBC, the New York Times, and the Guardian all covered the demonstrations — a sign this is no longer a marginal movement. Many protesters credited Article 9 with keeping Japan out of the US-Iran war. Takaichi, speaking from Vietnam while the protests were underway, defended periodic constitutional updates as necessary to reflect current security demands. Whether the movement sustains or rises and falls as it did before — as the 2015 Students Emergency Action for Liberal Democracy (SEALDs) campaign did — remains open. Senior Liberal Democratic Party (LDP) figures including Taro Aso, along with former rivals who lost to Takaichi in last year’s leadership race — Koizumi and Motegi — are launching the National Power Study Group, with a first meeting set for May 21 with the American ambassador present. The stated aim is to align the prime minister and the party on policy. Tobias Harris, who writes Observing Japan, calls it “a tacit admission that the PM’s position in the party is less than firm.” It is telling that a prime minister averaging 63% approval over her first six months — the highest sustained level since Abe’s return in 2012 — still needs a committee to hold the party together. The LDP lost seven of 13 mayoral races on April 19 and the Ishikawa governorship in March; in Nerima ward, a grassroots independent beat the LDP’s cross-party candidate by 33,000 votes. The party’s secretary-general acknowledged voters want “a new political approach that differed from conventional paths.” The prime minister denied in parliament a Shukan Bunshun report that her camp spread defamatory videos of rivals — Koizumi among them — during last year’s leadership race, but the magazine has a consistent record of breaking political scandals before other outlets will touch them. On currency, the Finance Ministry confirmed it spent roughly ¥5-6 trillion on April 30, pushing the yen from near ¥160 to ¥155 per dollar, its strongest in ten weeks. Mr Ueda signalled rate hikes would continue regardless, despite the government’s appointment of two reportedly dovish academics to the bank’s board. Nuclear output reached 33.6% of operable reactor capacity in fiscal 2025 — the highest since Fukushima — but no additional restarts are planned for fiscal 2026, and the next possible one is delayed to summer 2027 at the earliest.
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G7 trade ministers condemn 'economic coercion,' discuss permanent critical minerals secretariat ahead of Évian summit
May 4–9, 2026
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Japan's largest anti-war protests in decades challenge Takaichi's military buildup and constitutional revision push
May 4–10, 2026
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LDP heavyweights launch pro-Takaichi 'National Power Study Group,' raising questions about return of faction politics
May 7–8, 2026
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Takaichi planning South Korea summit visit on May 19–20 to meet President Lee in Andong
May 8–9, 2026
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Takaichi Golden Week diplomatic offensive spans Vietnam and Australia, concluding economic and defense agreements
May 4–10, 2026
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US Treasury Secretary Bessent to visit Japan for talks with Takaichi, Ueda on trade and yen
May 7–10, 2026
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Japan-China tensions deepen as Beijing maintains pressure campaign and Tokyo weighs labeling China a 'threat'
May 6–10, 2026
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Japan intervenes in forex market to support yen as BOJ Governor Ueda signals continued rate hikes
May 7–10, 2026
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Quad discussions stall as observers debate whether Japan-Australia-India-US alignment can be revitalized
May 6–7, 2026
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Japan plans business delegation visit to Russia in late May as post-war economic groundwork begins
May 4–8, 2026
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JSDF fires Type 88 missile in first-ever live exercise with US, Philippines, and Australia in the Philippines
May 7–10, 2026
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LDP publishes immigration policy document outlining new JESTA system and stricter residence rules
May 09, 2026
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Other

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South Korea flag South Korea

That Washington and Beijing agreed to hold their trade talks on Korean soil — the first time Seoul has served as neutral ground in a direct confrontation between its two largest partners — is the clearest signal yet that Lee Jae-myung’s balancing act is working. The selection matters because both Washington and Beijing agreed to it. Seoul’s balancing act has until now been a design choice made in Seoul alone. Having both great powers accept Korean soil as neutral ground transforms it from posture into established fact. Mr Lee built on this through other channels this week: a call with Rob Jetten, the Dutch prime minister, focused on ASML’s role in semiconductor supply chains, and a call with Mark Carney, the Canadian prime minister, covering liquefied natural gas, critical minerals, and defence. The South Korea-India joint vision for 2026 to 2030 — released this week following Mr Lee’s April state visit — adds annual leader meetings, ministerial commissions, and cooperation across semiconductors, artificial intelligence (AI), and quantum computing. India designated South Korea an “indispensable partner” in its Act East Policy. The diplomacy is turning symbolic outreach into concrete arrangements. Samsung crossed $1 trillion in market value, the second Asian firm after Taiwan Semiconductor Manufacturing Company to reach that threshold. The Korea Composite Stock Price Index (KOSPI) broke 7,000 for the first time on May 6 and reached 7,500 by May 8. South Korea’s March current account surplus hit a record $37.33 billion, driven by a 149.8% year-on-year surge in semiconductor exports; total exports reached $94.32 billion, the highest ever. The travel balance swung into surplus for the first time in 11 years, partly on BTS concert tourism drawing more than 2 million foreign visitors. The risks arrived alongside the records. Ryoo Sang-dai, senior deputy governor of the Bank of Korea, speaking at the Asian Development Bank annual meeting in Samarkand, said it was “time to stop rate cuts and start thinking about rate hikes,” citing inflation above 2.2% despite government fuel price caps. He said guidance at the May 28 meeting under Shin Hyun-song, the governor, would be “more hawkish.” Crude oil jumped 45% to $112.3 per barrel in April — the direct consequence of the Hormuz disruption — which Mr Ryoo warned could act as “downward pressure on the annual current account” if prolonged. Household debt stands at 91.7% of GDP; a rate hike carries weight. Then there is Samsung’s semiconductor union, which announced an 18-day strike from May 21 to June 7 after rejecting management’s offer of roughly $340,000 per worker as a one-time payment. Workers want annual guaranteed payouts comparable to SK Hynix’s — around $900,000 a year, locked in for 10 years. A one-day strike in April caused a 58% drop in production for one shift. Analysts estimate the 18-day strike could cost between $6.9 billion and $11.7 billion in direct losses. The consumer division union has not joined, limiting scope — but the chip division is where Samsung competes for AI memory dominance, and that competition does not pause for labour disputes. The Hormuz attack complicated matters further. A Korean-operated vessel, the HMM Namu, was struck by what Seoul’s Foreign Ministry called an “unidentified aircraft” in the Strait of Hormuz — language that diverged from the American president’s description of the same event as an attack on a Korean vessel. The gap immediately revived the controversy over US intelligence-sharing restrictions, with a People Power Party (PPP) lawmaker arguing publicly that Seoul’s cautious wording reflected different or delayed situational awareness. The government dispatched investigation teams to the UAE and said it was in daily contact with 26 Korean ships anchored inside the Strait, coordinating simultaneously with Washington, Tehran, and all six Gulf states. That is the balancing act working under live pressure — but the row over language with Washington is a real cost. Domestically, the week was harder than the numbers suggest it should be. The anticipated Democratic Party of Korea (DPK) landslide in the June 3 local elections has narrowed into competitive races. The Daegu mayoral contest — historically solid PPP territory — is within the margin of error. Busan has moved from a double-digit DPK lead to single digits. Seoul is tightening. The driver is the special counsel bill, which would create an independent prosecutor to review criminal cases against Mr Lee that the party says were fabricated under Yoon. The PPP has seized on it as evidence of a “parliamentary dictatorship”
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Appeals court reduces former Prime Minister Han Duck-soo's insurrection sentence to 15 years
May 4–9, 2026
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Bank of Korea signals shift toward rate hikes as inflation rises on energy shock
May 4–8, 2026
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June 3 local elections tighten as DPK landslide forecast fades and PPP recovers
May 4–10, 2026
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Constitutional amendment bill collapses as PPP filibuster blocks first revision attempt in 39 years
May 6–8, 2026
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Samsung reaches \$1 trillion market cap as KOSPI breaks 7,000 on AI chip demand
May 5–9, 2026
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DPK pushes special counsel bill on alleged fabricated prosecutions; PPP launches task force to block it
May 4–9, 2026
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Samsung semiconductor workers reject \$340,000 bonus offer, threaten 18-day strike over AI profit share
May 7–8, 2026
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NIS briefs lawmakers on North Korea's constitutional amendment mandating automatic nuclear strike if Kim Jong Un killed
May 10, 2026
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Lee Jae-myung says people saved him from 2024 knife attack; civil rights commission overturns emergency airlift ruling
May 09, 2026
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KOSPI bull run drives debt-fueled investing surge, BOK study shows weak wealth-to-consumption link
May 7–10, 2026
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South Korean vessel attacked in Strait of Hormuz; probe launched, opposition demands government response
May 8–10, 2026
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South Korea's March current account surplus hits record \$37.3 billion on semiconductor export boom
May 08, 2026
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US-China trade talks to be hosted on South Korean soil for first time
May 10, 2026
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President Lee holds calls with Dutch and Canadian leaders on tech cooperation and trade
May 07, 2026
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South Korea launches KRW stablecoin proof-of-concept and tightens overseas crypto transfer rules
May 4–8, 2026

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Australia flag Australia

A rural New South Wales electorate that the Coalition had held for 77 years flipped to One Nation on Saturday, and Angus Taylor, the Liberal leader, called it existential. David Farley, the One Nation candidate, won Farrer after the seat was vacated by former Liberal leader Sussan Ley. One Nation is now polling second nationally, above the Coalition. Mr Taylor responded by making the contest about the economy, not culture — acknowledging that he cannot beat One Nation on immigration and identity. But Mr Taylor also backed Tony Abbott, the former prime minister, to become Liberal Party federal president, a position Mr Abbott is now all but certain to win given the conservative faction’s hold on roughly 70 of the 113 federal council votes. Mr Abbott’s control of the party organisation will pull it in a cultural-conservative direction, directly at odds with Mr Taylor’s stated strategy. The Cabinet had been watching One Nation’s rise more carefully than it let on. An investigation by the Sydney Morning Herald revealed that Anthony Albanese, the prime minister, Jim Chalmers, the treasurer, and Katy Gallagher, the finance minister, had been meeting in secret since November 2025 — months before the fuel crisis — planning to scrap the government’s pre-election pledge not to touch negative gearing and capital gains tax concessions. One in ten Labor voters had been drifting to One Nation. The Budget, due May 12, will cap or abolish negative gearing, reduce the capital gains tax discount, and reform trust taxation. The government framed it as addressing intergenerational inequality; it was also clearly defensive politics. The economic backdrop made none of this easier. The Reserve Bank of Australia raised the cash rate a third consecutive time on May 5, lifting it 25 basis points to 4.35% in an 8-1 board vote — back to 2011 levels and unwinding all of last year’s easing. Michele Bullock, the governor, signalled a pause, but the bank’s own forecasts point to a terminal rate near 4.7% by year-end, and Westpac and Bendigo Bank now expect further hikes in August and September. Bloomberg described Australia as an outlier among global central banks; the Federal Reserve, the Bank of Japan, and most peers are holding. The government’s answer to the fuel vulnerability exposed by the Iran conflict is a $10.7 billion package — $3.2 billion for a government-owned reserve targeting more than 50 days of diesel and aviation fuel by 2030, and $7.5 billion in loans, equity guarantees, and insurance through a Fuel and Fertiliser Security Facility. From July 2027, energy companies will be required to reserve gas for the east coast domestic market. The package is financed off-budget. Tony Wood of the Grattan Institute called the feasibility studies for new refining capacity pointless given that Australia produces no oil to refine. Richard Marles, the deputy prime minister, also confirmed that Washington had not asked for Australian naval support in the Strait of Hormuz, though he said talks were continuing. Australia’s Pacific diplomacy produced a clear win and a loss in the same week. Penny Wong, the foreign minister, and Pat Conroy, the Pacific minister, flew to Suva and finalised the Vuvale Union, a treaty-level agreement with Fiji covering security, policing, transnational crime, economic ties, and people-to-people links, alongside a pledge of A$30 million to help Fiji manage fuel price shocks. Fiji is the fourth country — after Papua New Guinea, Nauru, and Tuvalu — to sign a security pact with Australia since 2023, each designed to limit Chinese security access in the Pacific. But in Vanuatu, China is close to finalising its own rival deal. Mihai Sora of the Lowy Institute described the tactics as diplomatic intellectual property theft, with China allegedly bribing Vanuatuan politicians to block a parallel A$500 million Australian treaty. Australia is winning in Fiji; it appears to have lost in Vanuatu, at least for now. At home, the government moved quickly on a different security matter. Police arrested three women on arrival after they returned from the Islamic State camp at Roj, Syria. Kawsar Abbas and her daughter Zeinab Ahmed face crimes-against-humanity charges for allegedly owning a Yazidi slave; Janai Safar faces terrorism membership and travel charges. All three were denied bail. Twenty-one Australians remain in Syrian camps. Mr Albanese said he had no sympathy for the women but sympathised with the children, calling them victims of their parents’ decisions. Mike Burgess, the director-general of the Australian Security Intelligence Organisation, said the national terrorism threat level was unchanged.
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One Nation wins first lower house seat at Farrer by-election, triggering Liberal Party crisis
May 7–11, 2026
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RBA raises cash rate third consecutive time to 4.35%, signals pause as inflation forecasts revised upward
May 1–11, 2026
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IS-linked women return from Syria, three charged with slavery and terrorism offences
May 6–11, 2026
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Australia-Fiji Vuvale Union treaty finalised; China blocks parallel Vanuatu deal
May 4–8, 2026
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Albanese government's May 12 federal budget to include negative gearing and CGT overhaul, reversing pre-election pledge
May 7–11, 2026
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Australia-Japan summit: Albanese and Takaichi sign economic security declaration covering energy, defence, critical minerals
May 4–7, 2026
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Albanese announces \$10.7 billion fuel security package including government-owned reserve and east coast gas reservation
May 6–7, 2026
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Liberal Party leadership turmoil: Tony Abbott seeks party presidency amid post-Farrer crisis
May 5–9, 2026
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Inland Rail Melbourne-Brisbane link abandoned as cost blows out beyond \$45 billion
May 5–11, 2026
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Budget funds new ASIO-led counter-terrorism online centre; scrutiny of ASIO funding priorities intensifies
May 5–9, 2026
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Albanese publicly backs UK Prime Minister Starmer amid resignation pressure
May 11, 2026
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Five Eyes agencies (including Australia) publish joint guidance warning against rapid agentic AI deployment
May 4–5, 2026
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Pacific Islands Forum invokes Biketawa Declaration over regional fuel crisis
May 8–9, 2026
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Hantavirus outbreak on cruise ship: Australia charters flight to repatriate nationals
May 11, 2026
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Australian Gaza flotilla activist returns home after Israeli detention
May 04, 2026
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Australia's antisemitism royal commission hears personal testimonies on growing hostility
May 09, 2026
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Australia's petro-diplomacy: Wong visits China to push resumption of fuel exports
May 09, 2026
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New Zealand opens frigate replacement discussions with Australia and Britain
May 07, 2026
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Other

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Indonesia flag Indonesia

Prabowo Subianto flew from the ASEAN Summit in Cebu directly to Indonesia’s northernmost inhabited island, and within 24 hours he had recycled his summit-podium claims about food self-sufficiency into anti-Jakarta rhetoric at a fishing village near the Philippine border. The summit confirmed Indonesia’s continued, if instrumental, engagement with ASEAN. Mr Subianto pushed the Five-Point Consensus on Myanmar, urged faster progress on the Trans-Borneo Power Grid, and declared Indonesia “very respected” for food self-sufficiency — a claim others dispute. ASEAN leaders adopted the Cebu Protocol on May 8, the first amendment to the ASEAN Charter since 2007. His domestically built Maung MV3 tactical vehicle came to Cebu as his presidential transport; the Presidential Secretariat made a point of noting it drew interest from regional delegations. Indonesia’s policy of keeping ties with all sides is unchanged; the summit confirms continued ASEAN engagement, though partly staged for audiences at home. At Miangas — only the second sitting president to visit the island after Joko Widodo in 2016 — Mr Subianto met soldiers from the Indonesian National Armed Forces (TNI) at their border post, pledged to build a fishermen’s village within five months, and told residents that “smart people in Jakarta don’t care about fishermen.” The following day in Gorontalo, he promised 1,386 fishermen’s villages completed by December 2026 and announced that Indonesia would “soon” be self-sufficient in fuel, requiring no more imports. He offered no mechanism for achieving it. Pertamina, the state energy company, is already selling fuel at a loss, with oil above $110 a barrel. The more important story this week, though, comes from party branch elections. The Indonesian Democratic Party of Struggle (PDI-P), the only party outside Mr Subianto’s coalition, completed branch-level elections across 666 sub-districts in 38 regencies and cities in East Java alone — 341 local chairs sworn in simultaneously, with more than 20% of new leadership positions going to Gen Z and millennial candidates and over 30% to women. The party is running the same process in Central Kalimantan, Jambi, and Jakarta. The party secretary called it “major consolidation to ensure the entire structure moves solidly with the people toward the 2029 elections.” PDI-P holds only 110 of 580 seats in the legislature and cannot block government legislation. But the scale of this week’s rebuild — 666 sub-districts in a single province — challenges the assumption that Indonesia’s opposition is organisationally weak. Legislatively, it remains irrelevant; at the grassroots, it is building at a pace that routine party maintenance does not explain. Gibran Rakabuming Raka, the vice president, attended the 55th death commemoration of Nahdlatul Ulama co-founder KH Abdul Wahab Chasbullah in Jombang, distributed bicycles to students, promoted the government’s Kampung Haji pilgrimage-village programme, and asked Islamic scholars directly to “support priority presidential programs” — specifically the free-meals scheme and the fishermen’s village network. The pesantren council chairman said afterwards that he hoped Mr Rakabuming would “bridge communication between clerics and the government.” The Jombang visit confirms the vice president remains a liaison, not a policymaker. Two accountability questions that drew international attention in recent weeks — the rules-of-engagement review following four Indonesian soldiers’ deaths in Lebanon, and the trial of armed forces officers accused in an acid attack on an activist — produced no new public developments. Military courts are processing the acid attack case at an undisclosed pace. The legislature’s defence committee has taken no formal action on the Lebanon question. In both cases, inaction is now the pattern.
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Prabowo visits Gorontalo fishermen's village and Miangas border island following ASEAN Summit
May 9–11, 2026
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Gibran attends Jombang Islamic boarding school commemoration, promotes Kampung Haji program
May 6–11, 2026
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Prabowo attends 48th ASEAN Summit in Cebu, pushes food security, energy, and dialogue on Myanmar
May 7–10, 2026
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PDI-P conducts nationwide branch-level reorganization (Musancab) ahead of 2029 elections
May 5–11, 2026
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Golkar faces dual internal crises: contested Wonosobo regional congress and Bengkulu office land dispute
May 8–11, 2026
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Mount Dukono eruption kills three hikers including two Singaporeans, TNI assists recovery
May 8–10, 2026