Last week, a Hong Kong court ruled that the largest indebted property developer in the world, Evergrande, would be liquidated, two years after the company defaulted on its debt in late 2021.
Much of the media reporting on the decision focused on whether foreign creditors would ever recoup their losses from Evergrande, as the Chinese government has already said it will prioritize completing the group’s existing projects, though how this will happen is less clear. But beyond the question of who will get repaid, Evergrande’s liquidation opens up a slew of larger and more profound questions about the future of the Chinese economy, especially the relationships between the central government, local governments, the private sector and households. The liquidation of Evergrande is not an accident. It is part of a larger crackdown on the private sector and government collusion that President Xi Jinping launched at the very start of his term, beginning in 2013 with the Anti-Corruption Campaign, which has become one of the most consequential and longest-running campaigns in the history of the People’s Republic of China. Taken as a whole, this crackdown has fundamentally changed the relationship between the Communist Party and the business community, creating deep distrust and fear, while leading to capital flight and a deep downturn in confidence. The Anti-Corruption Campaign was followed by other policies that put the private sector on notice that old patterns of behavior would no longer be tolerated. Xi’s “new normal” would include more discipline and oversight. Xi’s confidence in the ability of his government to implement this crackdown expanded enormously in late 2020 and early 2021, coinciding with the regime’s successful management of the COVID-19 pandemic before the arrival of the incredibly infectious omicron variant. Xi made numerous speeches and statements at the time about the importance of “common prosperity” and the need to crack down on “disorderly capital,” while also emphasizing his dislike of real estate development as investment, epitomized by his oft-quoted mantra that “houses are for living in.” The “three red lines” policy, which reined in debt-fueled property development and directly targeted firms like Evergrande that were enormously leveraged, dates back to this period. In addition to launching the attack on the over-leveraged property sector, Chinese authorities canceled the IPO of Ant Financial, forced the rewinding of Didi’s listing on the N.Y. Stock Exchange, banned private tutoring and nationalized gray rhinos, as large firms that create systemic risk, such as Anbang Insurance and HNA, are known. At the same time, in his speeches on “common prosperity,” Xi vaguely alluded to new forms of taxation and redistribution so that China would eventually become an “olive-shaped society” with a large middle class and relatively few rich and poor. But crackdowns alone cannot substitute for the deep structural reform that the Chinese economy desperately needs. Any viable solution to the property crisis and to local government’s fiscal health requires that China’s central government take on more responsibility and more accountability. Xi must shift from being a disciplinarian to accepting that these problems are not only rooted in the bad behavior of corrupt officials, greedy capitalists or overextended households. All of these actors were responding to incentives set up by China’s development model, which grew increasingly dependent on real estate and land development for growth. So while Xi talks frequently about high-quality development as the “hard truth” of his administration, this is unlikely to be achieved without a fundamental shift in responsibility upward toward the central government. In other words, it’s not just local governments and private entrepreneurs who must change their behavior—the central government must as well. Given the scale of the current crisis—over 1.5 million home purchasers are still waiting for residences that they have already paid Evergrande for—it’s possible that local governments will still be held responsible for finding other viable real estate developers to take over the unfinished projects in their regions. But local governments are themselves deeply in debt for both related and unrelated reasons. Local governments were caught up in the same frenzy of real estate development and land sales for years. But they are also reeling from debt related to COVID-19 management and testing, as well as from the basic structure of their fiscal relations with the central government, which leaves them with many mandates to fund social security and public goods like education, but without enough resources to do so. This fiscal imbalance is one of the primary reasons that local governments became so reliant on land speculation and real estate development in the first place, because in a period of ever-rising property prices, it provided much-needed revenue. It was also, not coincidentally, an excellent mechanism for local officials to collude with real estate developers to become personally wealthy. As a result, local governments are implicated in the accumulated problems of overinvestment and corruption. But any long-term solution will require changes to the tax system, so that they have sufficient tax revenue to pay for the disproportionate amount of governance they are tasked with. This will by necessity include more directly taxing both the wealthy and property, and directing more tax revenue to localities instead of the central government. Requiring local governments to find “viable developers” to take over Evergrande’s unfinished homes also ignores how Evergrande’s problems are only the tip of the iceberg of real estate development debt. It is not even clear which developers are viable enough to take on the burden of finishing the homes Evergrande has already been paid for, while also attempting to make money on new development, given China’s significant overbuilding and declining property values. A new International Monetary Fund report on the Chinese economy estimates that China’s fundamental demand for housing will decrease by 50 percent over the next decade, even as media reports indicate a current oversupply in excess of 50 million homes. The real estate sector cannot deal with these problems alone, but most local governments are in no position to help. An effective solution will require that the central government allow for substantial restructuring of existing firms and perhaps direct bailouts to households currently left holding the bag. The IMF estimates that such measures will cost about 5 percent of GDP but will be offset by avoiding longer-term losses. For households, the real estate sector’s unraveling is hitting their pocketbooks directly. Because of China’s presale model of development, households have already paid for the promised properties, so they cannot be expected to pay more, especially when the value of these future properties are going down. Meanwhile, investments in existing property are the most important source of wealth for China’s urbanites, representing about 70 percent of household wealth. So the contraction in the real estate sector, while necessary, will make many Chinese poorer. Employment opportunities have also worsened, as the real estate decline affects not just construction, but everything else tied to property, from landscaping to interior design. All of these impacts will exacerbate the problem of consumer confidence, inducing households to save rather than spend, an incentive structure that is already reinforced by China’s weak social safety net. This in turn means that China will be forced to look to external markets to absorb excess capacity in everything from building materials to electric vehicles, further exacerbating imbalances that are complicating China’s relations with trade partners. Once again, any effective policy to address the problem of consumer confidence will similarly require more support from the central government and improvements to China’s underfunded and shallow welfare state. The risk of social unrest is still low due to strong state capacity to repress street protests. But Chinese households have already shown ingenious ways to express their displeasure through inaction, such as not paying mortgages and not seeking employment—the practice known as lying flat. Beijing has accomplished much with Xi’s dramatic crackdowns as he seeks to shift China’s development in a new and more sustainable direction. But the crackdowns are only the first step. They need to be followed by increased support for local governments from the central government. So far, Xi has deftly yielded sticks. Much will depend on whether he can now do the same with carrots.
0 Comments
EDITORIAL: Von der Leyen celebrates ‘a great day for Europe’ as farmers protest in Brussels3/2/2024 “Agreement! The European Council delivered on our priorities. Supporting Ukraine…. A good day for Europe,” tweeted unelected European Commission President Ursula von der Leyen on Thursday, as EU farmers “high-fived” her by throwing eggs, lighting fires and dumping manure in Brussels, where a reported 1,300 tractors had gathered in protest.
Surely it must have been in anticipation of this “great day for Europe” that Brussels rolled out the barbed wire to keep the bloc’s own struggling farmers at bay while its leaders cut yet another check for Ukraine — after threatening the one anticipated holdout with national economic “blackmail,” as Hungarian Prime Minister Viktor Orban qualified it. It’s hard to believe that this meeting actually took place in Brussels. These officials are so disconnected from reality that it may as well have been held on a whole other planet. Unlike the Ukrainian products making their way onto Western European dinner plates to stick it to Russian President Vladimir Putin (because turtlenecks and short, cold showers apparently failed to do the job), this crisis is certifiably EU-made. No one knows this better than the farmers, who also realize that it makes more sense to blockade the streets of Brussels than the national highways of their home countries, which they’ve been doing with overwhelming public support – from nine out of every ten citizens in the case of France, according to a recent Odoxa poll. It was the EU with its climate change obsession that imposed a Common Agricultural Policy on farmers across the entire bloc, managed by bureaucrats divorced from the reality on the ground. Pencil pushers use EU Copernicus satellite images to spy and crack down on farmers whose paperwork doesn’t match – even if any discrepancies can be chalked up to uncontrollable but temporary conditions like the weather. It was also the EU that piled on regulations under the pretext of ensuring the quality of farm products, while at the same time flooding the bloc with grain, poultry, and other imports from Ukraine. Does “Chernobyl chicken” mass-produced by workers who are paid a pittance represent a threat to the physical health of citizens and economic health of farmers? If not, then why can’t Brussels take its jackboot off the necks of its own farmers so they can compete on a level playing field? The EU has also suddenly decided to ease up on some pesticide bans, angering greens. Paris is promoting the idea that ideologically-driven bans need to end, which seems like a tacit admission of their uselessness. So what should we be more worried about now – ideologically-driven authoritarianism under the guise of health consciousness, or an actual health threat? And what about that Ukrainian grain that EU officials demanded Russia unblock to feed the poor in developing countries? It turns out that Turkey and Russia were right when they raised the alarm about it just being dumped right next door in Europe, and it sounds like Russian President Vladimir Putin was effectively a bigger defender of EU farmers’ interests than Brussels was. But who’s even surprised anymore by Brussels’ misplaced priorities, given the image that has now emerged of another €50 billion ($54 billion) going out the door to Kiev, in support of a country that’s undercutting the EU’s own farmers without even being in the EU itself? It was also the EU that screwed itself, its entire population, industry, and farmers out of cheap Russian energy, driving inflation that caused consumers to turn to cheaper food products and, in turn, driving industrial distributors to buy more cheaply, favoring Ukrainian imports. French President Emmanuel Macron said that he’d now be merciless with those industrials, as he limbers up to toss them under the tractors instead of taking responsibility for his own inaction or blaming Brussels for a top-down anti-Russia policy that’s doing far more harm than good. The farmers’ problems are existential. And while some French farming union chiefs have called for the suspension of blockades in light of the most recent series of promised reforms announced by Prime Minister Gabriel Attal, it’s not clear whether the rank and file will actually listen in the long term. These are people who don’t talk much, but when they do, they’re direct and concrete. As one farmer told me, “Our feet may be in the dirt, but the dirt is clean” – in contrast to some politicians who have different narratives depending on their audience. Even with the suspension of the blockades on Friday, union reps admit that if government action and implementation doesn’t follow shortly, then the blowback from the same farmers risks being “catastrophic.” For many farmers I’ve spoken with, it’s far too little, and way too late. The average French farmer’s income, estimated by government statistics back in 2021 at around €17,700 a year (for people who regularly work 70 hours a week), has since been subjected to even more blows. Yet governments have insisted on milking this particular cow until there’s nothing left. How else to explain the careless decision to raise taxes on farm fuel by 3 cents a liter, every year, and the insistence on maintaining such a policy at a time when the price of energy had skyrocketed as a result of knee-jerk anti-Russian ideological choices imposed by the EU? Until the tractors spilled onto the highways in France, Paris showed no interest in reversing this tax policy, which was implemented to drive the “green transition” away from conventional energy, and against all pragmatic reality. Clearly French officials knew of its devastating impact, as it was one of the very first concessions that Attal tried tossing like a speed bump in front of the advancing tractors on January 26 – and which the farmers rolled right over, demanding more. Then there’s Queen Ursula briefly breaking from her fawning over the EU farmers’ current nemesis, Ukraine, to propose easing their “administrative burden.” Too bad she didn’t do that before letting Ukraine into the market in the first place. Guess she could always just blame Putin for making her do it. The bureaucracy is so overwhelming at this point that her proposal to the farmers is like offering to save people drowning in the ocean by tossing them a bucket. She could have stopped the paperwork pile-on at any time, but didn’t. And how exactly could she know this demagoguery was killing European farming? You’d think that the first clue would have been the fact that EU policies ended up strong-arming Dutch farmers to sell their land to the government because their cattle’s nitrogen emissions exceeded climate policy limits. Macron has now started to lobby the EU to restrict Ukrainian imports. Wow. You’d think these tractors were Decepticon Transformers about to rise up and kick their behinds, the way that all these EU leaders are suddenly springing into action. But the fact that an elected president even has to go cap in hand to plead with unelected Brussels bureaucrats, rather than make sovereign decisions in the best interests of his own country, is pathetic. Like, what if they say no? Then what? Does Macron think that he’s going to single-handedly and permanently derail the new Mercosur free trade deal, ready for signature, and set to flood the EU with even more farm products from Brazil and the rest of South America? If Macron, or any other EU leader had any courage, they would have vetoed the €50 billion for Ukraine and demanded that it be used in consultation with EU farmers to ease their burden and “unscrew” the bloc. That’s a lot of bought time for the EU to figure out how to deconstruct the mess that it has made of its own house through corruption and special interests – all in hope that one day, people doing honest work can also make a commensurately decent living.
After that effort failed, Pyongyang has now effectively “given up.” It believes it has no options left, and has continued developing its nuclear program and increasingly hardening its position, emboldened by the geopolitical context in respect to Russia and China. It might be noted early on that this assessment does not give “hard” evidence of North Korea pursuing such a path, and relies only on changes in Pyongyang’s rhetoric to argue that the DPRK’s claims are not “bluster” but a true reflection of its strategic position. Many things have changed since 2019 that should be taken into consideration: the Biden administration has no interest in negotiating with North Korea, a hostile Presidency has came to power in Seoul under Yoon Suk-yeol, who is pro-Japan and has abandoned the reconciliatory approach of Moon Jae-in, while the US’ confrontation against both Russia and China has given the DPRK new options to try and subvert the isolation it experienced during the era of American unipolarity.
Because of this, the US has completely lost its ability to hold North Korea’s nuclear and ballistic missile programs to account, with new sanctions now being blocked at the UN by Moscow and Beijing, and existing ones not enforced. North Korea is increasingly capable of hitting the American homeland with ICBMs. This is also making unilateral, pre-emptive military action by the US against the DPRK an increasingly unrealistic prospect. But why would this enable Kim Jong-un to pursue a war of choice against South Korea and, should he start one, would he truly have a chance of winning it? North Korea’s entire diplomatic strategy from the 1950s onwards has always been to exert maximum leverage for itself as a small country, by creating crisis. This is the Juche ideology’s ultimate focus on independence and sovereignty at all costs, even to its own population. To this end, the DPRK has always been provocative, whether it be killing US soldiers with axes, capturing the US spy ship USS Pueblo, shelling South Korean islands indiscriminately or even sinking a South Korean warship during an exercise. In doing so it aims to force the hands of not only its enemies but also of those who are friendly to it. Recognizing its critical strategic position, Pyongyang has absolutely no problem dragging Moscow and Beijing into a crisis whether they like it or not, and was happy to cause significant trouble during the Sino-Soviet split. Therefore, in an era when China and Russia are both in a state of tensions –even confrontation– with the US, North Korea ultimately calculates opportunity for itself and extended leverage. Kim Jong-un will recognize that neither state in such a geopolitical situation could tolerate the fall of his regime and the reunification of the Korean peninsula on US-centric terms, which, for China, places an American military presence right next to its own border. Indeed, even though Kim Il-sung started the Korean war in 1950 and subsequently faced defeat from the US and its allies, China still saved him – and back then it was much weaker than it is now. So, would Kim Jong-un fancy his chances in unleashing a full-scale war again on the Korean peninsula on the premise China would be forced to intervene? That isn’t beyond the realm of possibility. Does Kim want the US and China to normalize and improve ties? Of course not, because it means they will cooperate against him to force him to denuclearize. As for the benefits of such a reconciliation for the global economy – why would Kim care about that when his country is impoverished and isolated from said global economy anyway? So where does this leave the DPRK? It leaves Kim Jong-un with a window of time to achieve a series of geopolitical objectives and goals, in a context which is favorable to him, and therein raises the prospect of a serious escalation of tensions in some way. We’ve already seen how similar considerations led to a full-scale war, or two now, in the Middle East. We can’t determine whether they will lead to the outbreak of a conflict on the Korean peninsula, but it would be foolish to rule out the possibility, given the world we live in today. Multipolarity has arrived and it heralds the collapse of the US-centric, unipolar order which imposed stability by force as a one-way street. Many obviously assume the DPRK’s Soviet-era military could be destroyed by overwhelming US and allied power in the same way Saddam Hussein’s was in 1991 and 2003, but that was a different world. Here, you have a nuclear capable DPRK that has overseas backers who, while never wanting such a conflict, can’t afford to see the state fail. North Korea has made attempts at peace but met with America’s absolute unwillingness to compromise – therefore, what options does Kim have left to deal with South Korea? In the symphony of American politics, the Iowa caucus has once again unveiled its complex dance as the first major contest in the run-up to the presidential election, leaving candidates and observers alike mesmerized in its wake.
Among the cacophony of contenders, one name resonates louder than the rest – Donald J. Trump. The maverick, the disruptor, the maestro of political showmanship, is back, and his showing in Iowa has stirred both supporters and critics into a fervor. As the Iowa caucus unfurled its drama on Monday, Trump’s presence loomed large. Despite the unorthodox scenario of a former president participating in a caucus typically reserved for contenders and the fact that he has refused to participate in televised debates with his rivals, Trump’s decision to engage in the Hawkeye State signaled a reprise of the political opera that had captivated the nation during his presidency. His opening gambit was nothing short of spectacular – a strategic dance between traditional Republican values and his unapologetic Trumpian brand. It was a calculated performance and a firm reminder that the GOP, as it stands today, is unmistakably Trump’s domain. In short: Trump’s influence was palpable and he never had a chance of losing the caucuses. His base, a formidable force that has weathered storms and controversies, mobilized with a zeal reminiscent of a movement rather than a mere political campaign. The Trumpian faithful, armed with red hats and unwavering loyalty, stood as a testament to the enduring impact of the 45th president. As the results trickled in, it became evident that Trump’s resonance with the Republican base remains unparalleled. His unique blend of populism, economic nationalism, and an unfiltered approach to politics has forged a connection that defies the norms of conventional Republicanism. The Iowa caucus, with its intricate dynamics, exposed a conundrum within the GOP. The party finds itself at a crossroads, torn between the allure of Trump’s unapologetic approach and a desire to reclaim a semblance of its pre-Trump identity, with such carbon Republican cutouts as former UN ambassador Nikki Haley and former VP Mike Pence. Trump’s shadow, cast long over the proceedings, poses a challenge that the GOP must confront – embrace the Trumpian legacy or attempt a return to a more traditional conservative narrative, the latter apparently next to impossible. As the maestro orchestrates his political comeback, the legacy of Trumpism emerges as a defining force. It’s a legacy that transcends party lines and polarizes political discourse. Trump, with his unfiltered rhetoric and dozens of standing felony charges related to his alleged attempts to overturn the results of the 2020 presidential election, continues to be a lightning rod for both adoration and disdain. In Iowa, Trump’s legacy was not merely a campaign strategy; it was a spectacle that showcased the enduring influence of a political outsider who disrupted the established norms. The latest polls show that he is edging out incumbent President Joe Biden in a head-to-head, with the most recent Morning Consult poll having Trump ahead by 2 percentage points. Other polls reflect the same basic direction. Additionally, a recent approval poll by McLaughlin and Associates commissioned by America’s New Majority Project for Biden has him at a 60% disapproval rating. Trump has also been leading Biden in seven swing states since December. Despite all of his controversies, including his failure to responsibly manage the Covid-19 pandemic, his dictatorial handling of the George Floyd protests, and his hints that he wants to transform the US into a dictatorship, Trump has managed to make people nostalgic for a time before Biden. The former vice president was meant to be a technocrat, and someone the American elite could trust to defend their interests and maintain US hegemony. Biden’s administration has failed miserably at this task, consistently losing diplomatically vis-a-vis China and outright losing its proxy war in Ukraine. As the curtain falls on the Iowa caucus, Trump’s encore resonates, setting the stage for a political drama that will unfold across the nation. The GOP, a party at a crossroads, must grapple with the echoes of Trumpism – a force that refuses to be confined to the annals of political history. Trump’s results in Iowa may not be a mere prelude but rather the opening notes of a political saga that promises unpredictability, fervor, and a relentless pursuit of dominance. Some important Democrats recognize this, including Independent Senator Bernie Sanders, who caucuses with Democrats. Sounding the alarm on Trump’s strong showing, he said: “If Democrats hope to win this November, they must stand with working people and fight for an aggressive progressive agenda.” This will never happen. Biden, whose own base does not believe he is a suitable candidate, once famously said during the 2020 elections that “nothing would fundamentally change” if he were elected, and so he was correct: Under his watch, the rich have gotten richer, the poor have gotten poorer, and the war machine has kept on a-chuggin’. Biden’s mediocrity has made America yearn for Trump once again, and the results of the Iowa caucus show that Trump is the very clear favorite in this race. The European Union has put together a preliminary agreement that includes a €10,000 cap on cash payments to address the challenges posed by money laundering and the financing of terrorism.
The accord, reached through negotiations among member states and the European Parliament this week, seeks to protect citizens and the EU financial system from illicit financial activities. However, the proposed legislation raises privacy concerns and fears of state surveillance and government control over how people spend their money, as well as potential abuse of the new powers. The newly established regulations will impose the cash payment limit on entities engaged in financial services, banking, real estate agencies, asset management firms, casinos, and merchants. Moreover, these entities will be obligated to verify the identity of individuals making cash payments within the range of €3,000 to €10,000. While member countries have the flexibility to set lower limits for cash payments, the interim agreement introduces a heightened focus on monitoring high-net-worth individuals, a provision advocated for by Members of the European Parliament (MEPs). In an expansion of the scope of oversight, the interim agreement now encompasses a significant segment of the cryptocurrency sector. Crypto service providers will be required to authenticate customer identities for transactions equal to or exceeding €1,000. Beginning in 2029, the regulatory framework will be extended to include professional football clubs and agents, which will be categorized as obligated entities. This classification mandates these entities authenticate customer identities, monitor transactions, and promptly report any suspicious money transfers to the financial intelligence services of their respective countries. The agreement empowers member countries to exclude football clubs and agents from their national lists if they are determined not to pose a risk. National financial intelligence services and other competent authorities will gain access to information on ownership, bank accounts, and land and property registries. These authorities will also supervise the transfer of ownership for specific luxury goods, setting thresholds at €250,000 for cars and €7.5 million for yachts and aircraft. The impending implementation of the new legislation has ignited a robust public debate, exposing a diverse range of viewpoints. Heightened apprehensions surrounding potential totalitarian surveillance, especially with exemptions for high-profile individuals, evoke disquieting parallels to Orwell’s ‘1984’ and intensify fears of a dystopian reality. Skepticism has been cast on the effectiveness of these regulations, prompting queries about their ability to genuinely combat money laundering and fostering calls for a more inclusive strategy that addresses the burgeoning cryptocurrency sector. Conversely, some interpret the EU’s cash payment cap as a positive stride toward meeting the needs of the contemporary economy. They acknowledge the evolving financial landscapes and the digitization of cash flows, including the growing influence of central bank digital currencies. However, there are those who condemn these measures as excessive state control. The ongoing discourse reflects a polarized perspective on the EU’s actions, encapsulating concerns about potential abuses of power and the necessity of adapting payment methods to contemporary needs. This debate underscores the intricate dynamics between financial regulations, surveillance, and individual freedoms in the digital age. I spent a week with farmers protesting near the Brandenburg Gate in Berlin. Too bad Chancellor Olaf Scholz’s government didn’t get down off its high horse and do the same. It was a missed opportunity to benefit from a much-needed mugging by reality.
Instead, the Interior Ministry contented itself by preemptively framing the protesters as susceptible to far-right infiltration. Scholz said that “rage is being stoked deliberately” by “extremists”. When asked about this concept, the unanimous response among the farmers was laughter, eye rolling, or one-line jokes. If you want to put down a dog, just say it has rabies – or has been hanging out with the far-right. Despite the protest taking place right across the street from the German parliament, farmers said the only officials whose presence was noticed, as they inquired about the protesters’ concerns, were from the right-wing Alternative for Deutschland. Oh no, looks they’re co-opting already! Or maybe they’re just doing their jobs in trying to actually grasp the “ground truth” of the situation rather than framing it up with a convenient narrative in an effort to dismiss it. When a government official finally graced the protest with his presence on January 15, at the apex of the week-long protest, it was Finance Minister Christian Lindner, who took to the stage and loudly proclaimed that the government basically had no money. “I can't promise you more state aid from the federal budget. But we can fight together for you to enjoy more freedom and respect for your work,” he said. I’m not even a farmer – although I was raised on a farm in the Netherlands – and still I find this infuriating. Mostly just as a woman, though. Because Lindner sounds like a guy on a date who says that he’s broke, but instead of just splitting the check, he wants you to pay for the whole thing. The farmers aren’t asking Berlin to pay their bills. What they want is for Team Scholz to refrain from taking even more of their hard-earned money in the form of taxes on diesel fuel for their farm vehicles, particularly at a time when government efforts to stick it to Russia and to the climate-change bogeyman, by making fossil fuel energy less available and affordable, is making it increasingly harder for them to do the job of feeding the country. As if farmers aren’t already paying this government enough. One farmhand told me that his boss has a budget of €3,300 a month for his job, and that by the time all the taxes are paid to the German government, the final salary paid to the worker tops out at €1,400. Where’s all that cash going? Here’s a clue. Scholz said last fall that Germany had to “be able to help Ukraine on the basis of solidarity. We support Ukraine in its defense struggle, with financial resources and weapons.” Yet German farmers are not only told to eat cake, Marie Antoinette style, but also to pay up for the government’s screw-ups. Team Scholz blasted a hole in its own budget when it transferred cash from a Covid fund into a “climate and transformation fund,” but then couldn’t pay it all back, leaving a €17 billion ($18.5 billion) deficit and a scramble to somehow recoup the funds through austerity measures. So Scholz wants the farmers to pay his bills, but also to pay for his mistakes. And if they refuse, they must have been infiltrated by far-right extremists. Unlike this government, farmers pride themselves on productivity and self-sufficiency, which is why they’re juicy targets for the gold diggers in the Bundestag. When floods hit Germany, it was farmers, they say, who were on the front lines rescuing people even before the army was on-site. Throughout the entire protest week of sub-zero temperatures, farmers weathered the elements with several large wood-burning heaters fueled by a massive bin of chopped firewood. Many slept in their trucks or tractors all week. It’s hardly surprising that firefighters were captured on social media expressing their support and admiration for this group, as a large number of farmers also serve as volunteer firefighters in their communities. While he’s hiding across the street in his office, being serenaded by big-rig honking, Scholz’s popularity is hovering around 20%, while 69% of Germans support the farmers’ protests, according to an INSA poll from earlier this month. Has it dawned on the bundeskanzler that if such an overwhelmingly large swath of the population, from the right to the left, all agrees on something, then maybe he just has a “you” problem? The solidarity and unity witnessed in front of the Brandenburg Gate (a symbol of division once located in no man’s land between East and West Berlin) was astounding – from a woman in a hijab handing out soup from a basket to Berliners of migrant origin walking among the participants and expressing their support. Not only did trucks join the tractors, but word got out that farmers and truckers from the Netherlands were on the Autobahn’s A2 and heading towards Berlin. There was also buzz that Polish and Russian truckers were joining forces en route from the Polish border, just hours away. It’s not just farmers and truckers who are fed up. The folks who actually drive the Deutsche Bahn trains went on strike in the same week as the farmers. While the government is haggling with them over their union’s request of a €3,000 ($3,265) one-time employee bonus to cover government-driven inflation, it managed to nonetheless find several million more euros for each of nine top executives of the wholly government-owned company. The Brics grouping has long been distinguished by a consistent failure to live up to potential. The internal contradictions are crippling:
Divergent interests between members make it difficult to develop any shared policies. Brazil, Russia and South Africa are commodity exporters; India and China are importers. Brazil, India and South Africa are democracies; Russia and China only pretend to be. And India and China, as everyone knows, don’t exactly see eye to eye on anything. This year, the bloc has decided to take the bold step of enhancing those internal divisions manifold by admitting five new members: Ethiopia, Egypt, Iran, Saudi Arabia, and the United Arab Emirates. It was supposed to be six; but Argentina’s new president declared, in his usual restrained manner, that he had no intention of “allying with communists” and so won’t get a second Latin American member. Brics made up for that by admitting four members from that tranquil zone of stability and co-operation, the Middle East, and a fifth, Ethiopia, that’s barely a year out of a devastating civil war. More importantly, while the Emiratis and the Saudis are partners, and Riyadh appears happy to give the regime in Cairo billions to stay friendly, Iran and Saudi Arabia have spent the past decade or so struggling for influence in the region. Iran backs the Houthi rebels in Yemen, for example, against whom Saudi Arabia has fought a long and ineffectual war. And there is anger in Ethiopia over the government’s silence on the years of abuse (and, allegedly, “mass killings”) that human rights groups say Saudi border guards have inflicted on Ethiopian migrants. Far from papering over existing cracks in the Brics grouping, the the addition of new members has just increased the number of disputes. It may be hard to see how a group that has always struggled to get much done will be able to create anything substantive if they don’t even like each other. Still, with the addition of the new members, there are a couple of domains that bear watching. There’s a chance that, in these very specific fields, Brics + might prove to be unusually effective. One is infrastructure finance. The only real institution it has managed to build is the Shanghai-based New Development Bank. The “Brics bank,” which is currently led by former Brazilian president Dilma Roussef, has a mandate to lend to infrastructure projects that the rest of the multilateral architecture ignores. One of the few things the existing Brics members do agree on is that emerging economies need more project finance. Plus, they want that cash disbursed according to norms designed locally, not in the West. Of the two Beijing-backed financial institutions, the Asian Infrastructure Investment Bank is better capitalized and has been a more effective lender than the NDB. That may be because the AIIB picked up several Western partners with deeper pockets than China’s Brics peers, as well as partners with legacy, Western-led multilateral development banks. The NDB, meanwhile, has not always managed to offer competitive rates to possible borrowers. The very makeup of this alliance can work against its in-house bank. After the Russian invasion of Ukraine, it struggled to comply with the West’s various financial sanctions on one of its founding members. Shortly thereafter, Fitch downgraded it from AA+ to AA. (AIIB, in comparison, is rated AAA by the same agency.) The NDB’s management hopes that the addition of Saudi Arabia and the UAE prefigures an infusion of capital from the petrostates’ ample treasuries. The NDB can help with another thing that Iran, Russia, Brazil, the Saudis, and multiple other members of Brics + have in common: a dislike of the dollar. Forget all the “de-dollarization” talk — as anyone buying oil from Russia or Iran can confirm, we’re still very distant from a world in which trading nations can avoid dealing in dollars. But one thing the NDB does well is creating long-term loans denominated in the developing world’s own currencies. Almost a quarter of its loans are in the local-currency format that these governments far prefer. They aren’t a threat to dollar dominance. But they are a first step towards creating separate, smaller pipelines of cash that aren’t subject to, say, US sanctions. For the current Brics president, that’s a big priority. The Russian Federation took over leadership on Jan. 1, and we should expect Moscow’s priorities to dominate the expanded grouping’s initial agenda. Russia buys drones from Iran, collaborates with the Saudis on oil prices, and is building a nuclear reactor that will provide 10% of Egypt’s power. Brics ’s doubling in size won’t make it a more coherent threat to the West. It might, however, reduce the West’s leverage over countries like Russia or Iran. And, with wars blazing in both Gaza and Ukraine, that’s no small thing. As the political landscape gears up for the 2024 presidential election, speculation looms large about the possibility of Donald Trump returning to the Oval Office for a second term. The prospect of a Trump comeback has ignited a myriad of opinions, ranging from enthusiastic support to vehement opposition. It is crucial to analyze the potential implications of such an outcome, considering both the opportunities and challenges that may lie ahead.
One of the most apparent consequences of a Trump presidency redux would be the continuation of the unconventional and polarizing leadership style that characterized his first term. Trump's unapologetic approach to governance, marked by Twitter tirades, unconventional policy decisions, and a confrontational stance on international relations, would likely persist. Supporters argue that this unorthodox approach is precisely what the country needs to disrupt the status quo and shake up the political establishment. On the domestic front, a second Trump term could see a renewed focus on economic policies, given the former president's track record of prioritizing deregulation and tax cuts. Proponents argue that such measures could spur economic growth and job creation, while critics express concerns about exacerbating income inequality and neglecting environmental protections. In terms of foreign policy, a return of Trump to the White House would likely bring a reevaluation of international alliances and agreements. Trump's 'America First' agenda could lead to a more unilateral approach, potentially straining relationships with traditional allies. On the flip side, supporters argue that a recalibration of global partnerships might lead to better deals for the United States. However, uncertainties abound. The handling of the COVID-19 pandemic, a global health crisis that defined the latter part of Trump's first term, would demand careful consideration. Skeptics worry that a similar crisis management approach could pose challenges to public health and international cooperation. Furthermore, the potential impact on social and cultural divides within the nation cannot be overlooked. Trump's first term witnessed heightened political polarization and social unrest. A second term could either exacerbate these divisions or present an opportunity for healing, depending on the president's approach to national unity and inclusivity. Ultimately, the possibility of a Trump presidency in 2024 raises complex questions about the trajectory of the United States and its role in the world. Regardless of one's political persuasion, a sober and informed analysis is essential to navigate the uncertainties and possibilities that lie ahead. As the nation braces for another consequential election, citizens must engage in thoughtful dialogue and civic participation to shape the future of their democracy. News has been spreading throughout the media about a “disease outbreak” in China. For many, this brings back bad memories. The illness, described as a form of pneumonia, has reportedly gone widespread very quickly, triggering comparisons to how the Covid-19 pandemic emerged. As with the coronavirus, it was not long before there followed accusations of a government cover-up of the extent of the spread.
Cases of the same illness occurring outside of China have been the target of media attention, such as those in Denmark and the US, as has the World Health Organization’s request for more information and Beijing’s response. In reality, there doesn’t appear to be that much to worry about this time around. The pathogen responsible has already been determined not to be a novel virus and therefore not posing a distinctive new threat to humans the way Covid did. Known as “white lung syndrome,” it is a form of pneumonia that is resistant to some antibiotics and usually causes mild flu-like symptoms. In fact, the aforementioned Denmark suffers nationwide outbreaks every few years. So, rather than a mysterious political conspiracy wrapped in secrecy and malign intentions, this outbreak has a much simpler explanation: China is facing its first winter after having opened up from its zero-Covid policy and therefore old illnesses are reasserting themselves. But that won’t stop the scaremongering. Throughout history, it has been a human trait to scapegoat a group of 'others' when a disease emerged to threaten the community. Humans are tribalistic creatures, and each social group usually bonds together through a commonly held sense of values and customs, which are deemed superior to those of outsider groups. Disease, however, as abundant as it always has been, contravenes the group’s collective sense of self-esteem, causes misery and consequentially demands accountability on a political level. Because of this, it becomes habitual of human thinking to deflect the origins of a disease outbreak on an outsider group and to frame it as an invasive force which challenges the values they hold, and therefore could not have come from themselves. This mode of thinking is especially relevant in the East-West geopolitical dynamic, whereby Western countries hold themselves to be inherently superior and the ultimate standard of civilization in the world. In such thinking, most of the East, be it Asia or the Middle East, is deemed uncivilized, inferior and brutal. This mode of thinking is only confirmed by popular stereotypes, rather than introspecting material, economic and social realities. As a result, it has become commonplace to scapegoat the Eastern world, especially a large and powerful country like China – which happens to also a be a geopolitical adversary to the main Western power, the US – as being a source of disease outbreaks 'inflicted' upon the West. This was the narrative which took hold during the Covid-19 pandemic, as Western media and governments scrambled to deflect attention from unpopular decisions and their dramatic consequences. They sought to blame the Chinese government’s negligence, malice or both, for Covid, and propping up that narrative was an astronomical amount of racism which sought to play on stereotypes about Chinese culinary habits and hygiene, perfectly in line with the West-East mentality of Oriental 'inferiority'. Anti-communism, especially in the US, was conveniently layered on top of these prejudices, concealing them in a somewhat acceptable manner. Thus, the science of how Covid spreads was ignored in favor of a dramatic political blame game, which was aggressively amplified by the Trump administration. This time around, there won’t be a new pandemic, but it’s easy to draw false comparisons. It’s a basic fact that for the past three years China has lived under a strict zero-Covid regime which often entailed extreme precautions to prevent the spread of the disease. Entire major cities such as Shanghai found themselves in lockdown, and these restrictions only became more tedious as Covid variants became more transmissive. Because of this, there was no space in the disease ecosystem for flu and other less sensational illnesses, as they were jammed between the rock and hard place of Covid and all these protection measures. Therefore, as soon as China abandoned these restrictions, with the coronavirus having swept through the population, the winter season meant the less severe viruses could spread their wings again. Despite this, we are likely to see more media headlines about the scary new “Chinese disease,” because fear of disease, and especially fear of disease linked to a fear of China, sells well. Even though this development is a nothingburger, expect some close coverage, baseless speculations, even outright propaganda and hearsay about how things are worse than they seem, how the Communist Party is covering up deaths, how statistics are rigged, hospitals are full, etc. – we’ve heard it all before. The Covid pandemic has been a lesson in how diseases can be politically weaponized to suit an agenda, and in this case it’s happening again at a smaller scale. At the beginning of this week, foreign ministers from a group of Muslim-majority countries, including Saudi Arabia, Jordan, Egypt, the Palestinian National Authority, and Indonesia travelled to China in order to seek support for a ceasefire in the ongoing Gaza war.
The unconditional backing of Israel by the United States and its allies has tanked their credibility across the Islamic world, and Beijing has positioned itself as an advocate of peace when others are not willing to take up that role. It is curious that within the following few days, a report was released by Human Rights Watch, accusing China of expanding its alleged campaign of closing down and repurposing mosques into regions other than Xinjiang – which had so far been the focus of accusations that Beijing is cracking down on the predominantly Muslim Uighur minority. Even those allegations had been somewhat on the backburner in the establishment media lately, but the HRW report was quickly picked up and amplified. Although relations between the US and China have somewhat calmed down, it is obvious that Washington does not want to see Beijing increase its influence in the Muslim world, as that would inevitably come at the expense of American clout. The attempt to draw attention back to China’s alleged repression of its Muslim population, while underreporting Israel’s devastating attack on the (also Muslim) population of Gaza, is an exercise in deflection and part of the ongoing narrative war between China and the US. Be it about Muslims or not, the Xinjiang issue has long been a key component of that struggle for influence. The Uighur minority has, since 2018, been a tool of “atrocity propaganda” used to wage public relations offensives against China. It is a means to an end, which often disappears and resurfaces in the media, coinciding with the ebb and flow of anti-Beijing rhetoric coming from the US administration or the State Department. This includes using it to turn public opinion against Beijing in selected countries, including allies, or to manufacture consent for policies aimed at supply chain shifts or “decoupling,” through the accusation of forced labor, especially in the fields of key agricultural goods, polysilicon and solar panels, or to attempt to embarrass China diplomatically at the UN, or to push for boycotting events such as the Winter Olympics. This is an incredibly opportunistic attitude to something Beijing’s detractors claim is a “genocide.” Since late 2021, the Biden administration has largely ignored the issue and it has fallen off the international agenda, precisely because Washington had gotten the sanctions they wanted from it at the time. However, the Israel-Gaza conflict introduces a new dynamic whereby the US and its allies are dramatically losing face and credibility among Muslim nations because they are backing Israel unconditionally in the wholesale slaughter of Palestinians. From a geopolitical point of view, such a policy pathway is actually strategically disastrous because it alienates the entire Global South, serves as a beacon in projecting US hypocrisy and worse still, directly empowers China as a competitor. So when you are faced with a situation whereby Beijing is gaining diplomatic capital over your own failures, what do you do? You desperately aim to deflect by trying to draw attention to another issue in the attempt to smear Beijing: Xinjiang and the Uighurs. Now as it happens, Muslim countries mostly ignore US-led propaganda over the Xinjiang issue, because they see it for what it is and also share a common norm of respect for national sovereignty with Beijing, which is politically beneficial for them. The only Muslim nation who has ever made public comment about it is Türkiye, because Uighurs are a Turkic ethnic group and the issues is viewed through the lens of Ankara’s Pan-Turk ideology. However, Turkish President Recep Tayyip Erdogan is still likely to ignore the issue, or only involve himself in it based on what he can gain. On the other hand, the Gulf States, the key US allies in the Middle East, such as Saudi Arabia and the United Arab Emirates, support China’s position, and the Gaza issue is putting them under pressure regarding their relations with the US and the decision to normalize relations with Israel. So suddenly we are seeing a resurgence of Xinjiang material because the US, even if it cannot sway their governments, wants to kindle the anger of Muslim populations about another issue instead and diminish China’s credibility. Although this is less likely in Arab States, it could cause public opinion ruptures in key Asian Islamic countries such as Indonesia and Malaysia, where significant resources were placed by organizations such as the BBC in relaying Xinjiang-related content in their respective languages. But the question is, will this campaign succeed? It might be worth remembering that Xinjiang is an artificially imposed issue pushed “top-down” by governments and the media, whereas Palestine is a grassroots issue pushing from the bottom up, aspects of which media and politicians endeavor to selectively ignore. China’s heavy-handed management of Uighurs in Xinjiang is not really a genocide, and it will never rank on the same level of severity as the outright bombardment and mass killing of Palestinians, no matter how hard you try. The once-glorified clean-energy stocks are now facing their darkest days, plunging the industry into a financial abyss that threatens America’s ambitious environmental aspirations. The much-touted green revolution is looking more like a red alert as the sector hemorrhages tens of billions in market value. Sure, we’re told that hundreds of billions is still pouring into renewable energy projects, despite the fact that the stock market seems to have declared a resounding “no thanks” to these ventures. The iShares Global Clean Energy ETF (Exchange-Traded Fund), the poster child for the industry, has nosedived by over 30% this year and a whopping 50% since the dawn of 2021. Not to be outdone, specific sectors are getting their fair share of punishment. The Invesco Solar ETF is down over 40% in 2023, while the First Trust Global Wind Energy ETF is witnessing losses of about 20% this year and a grim 40% since January 2021. It seems the wind has been knocked out of their sails. Blame it on rising interest rates, the industry’s newfound nemesis. These higher rates have not only increased costs but also put a damper on consumer enthusiasm, leading to a nosedive in stock valuations for companies that once promised a green utopia but are now struggling to turn a profit. Solar companies such as SolarEdge and Enphase Energy are feeling the burn as demand for their products dwindles. Meanwhile, wind energy giant Orsted is singing the blues, with shares plummeting after revealing potential multibillion-dollar write-downs on its offshore wind projects in the US. In Germany, after the Nord Stream sabotage, because, you know, energy geopolitics and straightforward plans always go hand in hand, a whopping 77% of skeptics are shaking their heads, expressing disbelief that the nation will magically conjure up 80% of electricity from renewables by 2030. I guess turning skepticism into solar power hasn’t quite hit the mainstream yet. Switzerland, the poster child for phasing out nuclear power, is now flexing its green muscles by entertaining the idea of keeping nuclear plants running longer, because who needs a clear exit strategy when you can just extend the atomic party until 2040? Biden’s green dreams are melting faster than his favorite ice cream in the sun In the US, the demise of two New Jersey wind projects is just the tip of the iceberg, with inflation, sky-high interest rates, and a supply chain in shambles throwing a wrench into the gears of Joe’s climate ambitions. Despite a whopping $369 billion in federal aid from his climate law, clean energy projects are dropping like flies. Even the postponement of a Kentucky EV battery plant by Ford and General Motors trimming their EV plans couldn’t escape the economic tempest. It seems the only thing rising faster than hopes for a clean energy revolution is the cost. But hey, who needs affordable, reliable energy when we’ve got grand climate goals, right? Biden’s green plans are becoming a chilling reality check, and it’s not just the polar ice caps feeling the heat. It’s ironic, isn’t it? Not too long ago, clean energy was hailed as the savior of our planet, but now it seems the green agenda is drowning in a sea of red ink. The S&P Global Energy index, once a shining star, has seen its value halved since 2020 – a spectacular fall from grace. Fast forward to the present, and we witness the mighty green stocks taking a severe beating. Despite the EU and US governments offering billions in tax credits and subsidies to support the so-called green transition from Russian oil and gas, investors are losing confidence faster than you can say “renewable.”
The S&P Global Clean Energy Index has experienced a gut-wrenching 30% freefall in 2023, with the biggest quarterly outflow of $1.4 billion. The once-booming sector now holds a 23% decline in total assets under management, a far cry from its heyday just a few months ago. Blame it on the current economic climate, they say – high interest rates, soaring costs, and supply chain woes are the villains of this melodrama. And let’s not forget China, the puppet master of the solar supply chain, flooding the market with cheap alternatives, undermining the EU’s dreams of a local green market. As utility stocks struggle to convert to green energy, the sector’s operating margins are squeezed. The final nail in the coffin? NextEra Energy Partners cutting its growth target by half, sending shockwaves through the renewable industry. I dismiss the sell-off as overblown, but the damage is done, and confidence in renewables has hit rock bottom. So, what’s the moral of this green tale? It turns out, going green is not just about saving the planet; it’s an expensive affair. As the renewable energy stocks hit rock bottom, analysts are left wondering: is it time to buy, or is the green dream truly over? In a deliciously ironic plot twist, Greta Thunberg is currently sizzling in the crucible of criticism for daring to support Gaza. It seems our climate crusader is now facing a cancel-culture bonanza, much like the tweet she swiftly deleted – you know, the one prophesying Armageddon and cautioning that climate change might just “wipe out humanity” unless we magically halt fossil fuel usage by the grandiose deadline of 2023. The irony is thicker than Beijing’s smog, folks. Seems like even the green warriors can’t escape the unforgiving reality of the market. The journalistic cliché that World War III is already underway has often circulated from one publication or another for decades. Indeed, since the beginning of the 21st century, when the US was attacked on 11 September 2001, people have been talking about a clash of civilizations as a new form of global conflict. Then, Washington's declared "war on terror" got bogged down in the Middle East before disappearing from the agenda altogether. Instead, the "good old" rivalry between the major countries was gradually revived, first in the political, propaganda and economic spheres, but with an increasingly pronounced military and force element. This was accompanied by warnings of the risk of a World War III in the classic sense of the last century. Such considerations, however, remained notional. Today, the idea of a "World War III " is fathomable. Nevertheless, a similar situation to World Wars I and II seems inadmissible at the end of the first quarter of the 21st century, although some commentators see similar features in the armed conflict in Ukraine. Structurally, however, the state of affairs is very different. The presence of nuclear weapons in the hands of the world's major players and a very complex range of significant and diverse players in international politics rule out (and make highly unlikely) a head-on collision between the major powers or their blocs, as was the case in the last century. However, the changes taking place on the world stage and in the balance of power are so serious that they are "worthy" of a confrontation on the scale of a world war. In the past, such shifts have led to major military clashes. However, now the "world war" that some repeatedly talk about is a chain of large but localized confrontations, each of which in one way or another involves the main players, balances on the verge of spilling over from the original zone, and is indirectly linked to other hotbeds of instability. This sequence of military events began with the Middle East conflicts of the last decade (Yemen and Syria), continued in Ukraine since 2014, then the South Caucasus and now Palestine. It is clearly too early to put an end to this list. End of status quo means world entering long period of turmoilInternational colleagues have already pointed out that in the context of the disappearance of former frameworks and constraints (the very decline of the world order, which now seems to be universally recognized), dormant conflicts and disputes are almost inevitably resurfacing. What has been held back by the pre-existing arrangements is erupting. In principle, everything is quite traditional; it was so before and it will be so after. The ideologization of world politics in the twentieth century meant that the end of that political period was very ideological in itself. The view that humanity has found the optimal political model, which will turn the page on previous confrontations, has triumphed. This is the only way to explain, for example, the belief that the contours of state borders will not change in the 21st century (or only by mutual agreement), because it has been decided and established that way. The historical experience of Europe and other continents in every historical period does not support such an assumption – borders have always changed fundamentally. And shifts in the balance of power and opportunity inevitably give rise to the desire to move territorial boundaries.
Another thing is that the importance of territories is different now than it was in the past. Direct control of certain spaces can now have more costs than benefits, while indirect influence is much more effective. Although it is worth noting that 15-20 years ago, at the height of economic and political globalization, it was often argued that in a fully interconnected 'flat' world, geographical and material proximity no longer mattered. The pandemic was the first and most vivid argument against this approach. The current chain of crises has forced a return to more classical ideas about the role of subordination between the regional and the global. The disappearance of the status quo means that the world has entered a long period of turmoil in which new frameworks have not yet been established (and it is not clear when they will be) and the old ones are no longer working. The formal end of the era of the Treaty on Conventional Armed Forces in Europe (Russia has withdrawn from it, the other countries have announced the suspension of their participation) is an example of the dismantling of existing institutions. The unprecedented intensity of the wave of assaults on the UN from all sides is an attack on the main bastion of world order established after 1945. The current "World War III" is likely to endure over a long timeframe and be scattered in terms of locations. But based on its results – and there will be some – a different structure of international organizations will emerge. This is always the case. This does not mean that the UN, for example, will disappear, but there will definitely be a profound correction of the principles on which it operates.
With only 24 world leaders in attendance, compared to the 37 who had attended the last BRI Forum, Xi was keen to showcase that China is open for business at a time when concerns are rising about the health of Chinese economy. Promising to "comprehensively remove restrictions on foreign investment access in the manufacturing sector," the Chinese leader talked of his intent to focus on "cross-border trade and investment in services and market access for digital products."
This was China's first major international event since coming out of around three years of pandemic lockdown in January 2023 and was a celebration of one of Xi's signature projects. Not surprisingly, he was gung-ho about the achievements of BRI as he underlined how his initiative has helped the developing world by making infrastructure and connectivity the centerpiece of emerging global economic discourse. He outlined how China has "endeavored to build a global network of connectivity consisting of economic corridors, international transportation routes and information highway as well as railways, roads, airports, ports, pipelines and power grids," thereby boosting "the flow of goods, capital, technologies and human resources among countries involved and injected fresh vitality into the millennia-old Silk Road in the new era." There is no doubt that BRI has been an innovative idea to energize the next stage of economic globalisation and, for a large part of the world left outside the global economic order, this was a timely initiative which, by mobilising as much as $1 trillion in finance, allowed for new economic possibilities to emerge. But it was the operationalization of the idea that left much to be desired as several nations got saddled with huge debt even as the financial and environmental sustainability of many projects brought to the fore the vulnerabilities of a centralised, top down project. With several infrastructure projects stuck and the Chinese economy slowing down in recent years, this forum was also Xi Jinping's attempt to demonstrate his nation's continued commitment to a project in which he is personally invested and which is as much about geopolitical positioning of China in the emerging global order as it is about geoeconomics. Facing a lot of flak for the performance of BRI, Xi tried to send out a message that he is willing to make some changes with a move to "high-quality" development, focused primarily on the digital economy and sustainable "green development" and underpinned by "the philosophy of open, green and clean cooperation, and the goal of pursuing high-standard, people-centered and sustainable cooperation." Integrity is the new buzzword as Xi talked of establishing "the Integrity and Compliance Evaluation System for companies involved in Belt and Road cooperation" and working "with international organizations to carry out research and training on promoting integrity in Belt and Road cooperation." This was part of his eight-point action plan that also includes supporting an open world economy, promoting green development, advancing scientific and technological innovation, supporting people-to-people exchanges, and strengthening institutional building for international Belt and Road cooperation. In light of the challenges facing the BRI projects worldwide and others launching connectivity alternatives to BRI, it was imperative for Xi Jinping to be seen as making amends. How these changes get reflected on the ground will shape the future of BRI and China's credibility as a provider of global public goods. But for Xi Jinping, this is also about offering an alternative to the US-led global order, and the presence of Russian President Vladimir Putin and a Taliban delegation led by its acting minister of industry and commerce, Nooruddin Aziz, brought this into sharp relief. Putin, of course, was the star at the forum, getting a red carpet welcome from the hosts and applauding the "successes" of "our Chinese friends" in return. Russia has not officially signed on to the BRI but Putin made it a point to attend the forum in person despite not having travelled abroad since launching the Ukraine war. The Moscow-Beijing global alignment is unmistakable as they seek to challenge the West, also reflected in their explicit criticism of Israeli actions while refraining from condemning Hamas. Since the Ukraine crisis, where the West has tried to isolate Russia, China's embrace has become all-encompassing as it has emerged as Russia's most important trade partner, providing critical civilian and military goods that have sustained Russian economy and war operations. The other interesting presence was that of the Taliban, also meant to convey a message to the US that China will continue to move forward with its outreach to a pariah state, if only to scuttle Washington in achieving its objectives. Last month, China became the first country to send an ambassador to Afghanistan though Beijing is yet to give diplomatic recognition to the Taliban. China and Pakistan had also announced earlier this year that the China-Pakistan Economic Corridor would be extended to Afghanistan. Nothing much has come of it yet but China's support gives credibility to the Taliban's claims of being the only credible alternative in Afghanistan. China's celebration of a decade of BRI was more an attempt to showcase its own rising profile as the provider of an alternative to the US-led global order than to provide for the development needs of the Global South. But challenges for the BRI are mounting and Xi's words at the forum were an explicit acknowledgment that changes in Chinese approach would be necessary if the second decade of BRI is to see more accomplishments than the first. EDITORIAL: China’s Belt and Road Initiative Sets Off Great Power Competition in the Pacific16/10/2023 As China marks the 10th anniversary of its Belt and Road Initiative, also known as the BRI, many are assessing the impact of its global push to promote connectivity and billions of dollars in deals for infrastructure projects. In the Pacific, Beijing’s BRI has set off a race of great power competition with the United States and other countries. Analysts say so far, of the more than 30 projects in the region that China has launched, the results have been mixed, with some serving as "showpieces" instead of contributing to Pacific countries’ development or economic needs. "The BRI in the Pacific is more of a political instrument than a genuine development mechanism," Mihai Sora, a research fellow in the Pacific Islands program at Lowy Institute in Australia, said in an interview. "In Australia, a lot of commentators view BRI projects as a vanguard for the Chinese government to build influence in the Pacific." In the run up to the third Belt and Road Forum for International Cooperation that’ll take place in China this month, with more than 130 countries reportedly expected to attend, Chinese state media have published a series of reports highlighting the BRI’s success stories in the Pacific. Last month, in two separate articles, China’s state-run tabloid, the Global Times, highlighted how "the BRI vision is becoming a reality" in the Pacific Islands noting how China is providing medical services and professional training to local healthcare personnel in the Solomon Islands and how Beijing has helped the country to build a sports stadium for the upcoming Pacific Games. In another report, the Global Times stated that China’s cooperation with Pacific Island countries over the last 10 years focused on areas "such as humanitarian assistance, disaster response, and training. Most of the cooperation is reflected in infrastructure construction, tourism promotion and economic as well as trade issues under the BRI framework." But where Beijing sees progress and success, western think tanks and Pacific experts say the facts on the ground paint a different picture. In the 2023 Asia-Pacific Regional Security Assessment released earlier this year, the International Institute for Strategic Studies, a London-based security think tank, found that BRI has had minimal impact on Pacific Island countries that receive Chinese loans or grants. According to the report, as of the end of 2021, 26 out of 33 projects were completed, but there has been little shift on investment or trade. Last month, China officially handed over the main stadium that it helped the Solomon Islands build for the upcoming Pacific Games to authorities in Honiara, making it the latest addition to the list of completed BRI projects in the Pacific region. "Exports from China to the South Pacific have increased twelvefold in value between 2000 and 2018, though the numbers for exports from Pacific Island countries to China have grown at a much less impressive rate," the study said. "Further major Chinese investment in the form of large-scale physical-infrastructure projects is unlikely given the existing debt burdens and the lack of demand for Chinese loans." Some experts in the Pacific tell that realities in some Pacific countries also contradict China’s success stories. Sandra Tarte, an associate professor in international relations at the University of the South Pacific in Fiji, said some Chinese investments in Fiji have resulted in big towers that were half-built and unfinished for a long period of time. Some tourism projects that were supposed to be supported by China received initial fanfare but never got off the ground. "There was an influx of investment from China at some point in Fiji, but the investors ran out of money," she said. "A lot of things like that have happened here." Power plays in the Pacific To counter China’s growing influence in the Pacific, major Pacific powers such as the U.S., Australia, and Japan have dedicated more resources and efforts to re-engage with Pacific Island countries. Last week, U.S. President Joe Biden hosted a two-day summit with Pacific leaders in Washington, pledging to help countries in the region combat climate change and improve infrastructure with a $200 million package. Since May, the U.S. has signed defense cooperation and maritime agreements with Papua New Guinea and opened an expanded mission in the Pacific region as part of the efforts to compete for influence with Beijing. Apart from the U.S., Australia and Japan have both announced development packages to Pacific Island countries in recent months, with some of the support dedicated to deepening defense and security ties. Sora from the Lowy Institute says China’s push into the security space in the Pacific over the last few years, including the security pact that Beijing signed with the Solomon Islands in 2022, has raised concerns among democratic countries in the region. "Traditional partners like the U.S., Australia, Japan, and New Zealand have activated as quickly as they can to improve the quality of their relationship with the Pacific and to improve their offerings,". "Countries like the U.S. and Australia are trying to reassert the regional security order and make that contribution to international security but also look for ways to improve the economic prosperity of Pacific Island countries," Sora explained. Pacific countries’ collective voice However, western countries’ attempts to sign bilateral security agreements with Pacific countries have faced pushback in recent months. A proposed security treaty between Australia and Papua New Guinea has been delayed for several months due to ongoing domestic debate in Papua New Guinea. In addition, Vanuatu’s new Prime Minister Sato Kilman said in early September that the country needs to rethink its security agreement with Australia. To prevent their interests from being overshadowed by competition between China and the U.S., some analysts say Pacific Island nations have sought to project their collective priorities through multilateral institutions such as the Pacific Islands Forum and the United Nations. "Pacific Island countries will continue to demand that partners strike a balance between development and security assistance, as well as embrace their definition of security, which includes climate change," Parker Novak, a nonresident fellow at Atlantic Council’s Global China Hub, told VOA in a written response. Other analysts say one way for countries in the region to assert their vision is to promote the 2050 Strategy for the Blue Pacific Continent, a development initiative created by Pacific Island countries.
Tarte from Fiji’s University of the South Pacific says that approach could be a way to "reframe the debate" and avoid being dragged into the competing initiatives of the Indo-Pacific strategy and the BRI. For 16 years, Israeli governments worked to manage the Hamas leaders in Gaza, not topple them. The Islamist group rejected Israel's existence and engaged in violence, but kept order over the territory. Better Hamas than chaos. The carnage last weekend, when Hamas militants killed hundreds of Israeli civilians after a sophisticated breach of the border fence, has shifted official views. Now, the aim is to destroy the organization's military capability and kill its leaders. Left unsaid in Israel but widely assumed is that, when the war ends, Hamas will no longer rule in Gaza. In announcing the formation of an emergency unity government on Wednesday night, Prime Minister Benjamin Netanyahu referred to the Islamic State organization from the previous decade, saying, "Hamas is ISIS, and we will crush and eliminate it just as the world crushed and eliminated ISIS." Lieutenant Colonel Richard Hecht, a military spokesman, told reporters on Thursday: "Right now, we are focused on taking out their senior leadership, not only the military but also their government leadership." 'Mowing Lawn' This is a change from the previous military policy of occasional invasions, harsh but limited, sometimes referred to as "mowing the lawn," meaning a task to which one is required to return repeatedly. Any operation against the militant group is destined to result in more civilian deaths and raise diplomatic dilemmas. Turkey has already signaled a shift away from the intense diplomacy that was underway to normalize ties with Israel after years of estrangement. Rulers from Saudi Arabia to the United Arab Emirates could follow if public opinion in their countriesturns increasingly hostile to Israel. A former top military officer who remains in close touch with the army, speaking on condition of anonymity, said when the war ends, Israel may set up a temporary military regime and hand Gaza over to some international force. The head of the opposition, Yair Lapid, who didn't join the new government with Benny Gantz, another opposition leader, said this week on French television, "The endgame is there will be no Hamas in Gaza." His goal, he said, is for the Palestinian Authority, which holds power in the West Bank and recognizes Israel, would take over. Requests for comment from the prime minister's office and the defense minister weren't immediately answered. Little Mercy Israeli officials are showing no mercy for ordinary Gazans in their campaign, having cut electricity, fuel and food shipments from Israel and given residents few choices of where to hide as heavy bombings continue. At least 1,350 have been killed to date. According to Elai Rettig, an expert of the geopolitics of energy and environment at Israel's Bar-Ilan University, a power cut will result in water shortages in a week or two. That's likely to hinder access to health care or drinkable water for Gaza's 2 million people, half of whom are under the age of 18. Israeli authorities are worried about a humanitarian corridor into Egypt, saying that would allow Hamas leaders to sneak out. Rettig also said Hamas has been given aid to fix and upgrade the electrical system in Gaza but hadn't done so. Hostage Fate Nearly all analysts in Israel believe ground troops are headed in after the aerial pounding. Many of the dozens of Israeli hostages and some of the soldiers seem likely to meet their deaths. And that too is quietly discussed as a price the country is willing to pay to end Hamas's hold on Gaza and send a broader message to the country's enemies, including Hezbollah in Lebanon and its Iranian sponsor. Israel's biggest deployment of reserves in its history shows its leaders are aware how difficult it might be to crush Hamas, but eliminating it from Gaza is an even bigger task. An Israeli cross-border operation into southern Lebanon to attack Iran-backed Hezbollah in 2006 ended in massive casualties following more than a month of fighting. Since Saturday's attack, Hezbollah has fired into Israel every now and then, a reminder that it may be tempted to open a new front in the war after the Gaza ground offensive begins. The direness of the rhetoric is driven by the images of inhumanity on display last Saturday and the collective memory of Jews being slaughtered in the Holocaust and in pogroms a century ago. It has made many Israelis feel this is a war for their very existence, and they must show how tough they are. Retired Major General Yaakov Amidror, who was Netanyahu's national security adviser a decade ago, said, "We cannot go back to square one. This will take a few months. How many will be killed? Many, many. It's up to Hamas, which operates from populated areas. This is the last time we allow Hamas to be strong enough to attack Israel."
Asked who will rule Gaza when Israel is finished, he replied, "The people in Gaza will have to decide what is next. That is their problem." |
Thank you for choosing to make a difference through your donation. We appreciate your support.
This website uses marketing and tracking technologies. Opting out of this will opt you out of all cookies, except for those needed to run the website. Note that some products may not work as well without tracking cookies. Opt Out of CookiesCategories
All
Archives
April 2024
|