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Asia

The Belt & Road Initiative: Speed Bumps in the Middle East

 7 min read / 

Whilst the world’s attention is focused on the outcomes of the 9th BRICS summit, Saudi Arabia and Qatar have quietly begun to repair their relationship. Yet, the two countries could remain divided for some time. What role can China, the growing regional power, play in bringing long-term stability to the region and in the current Belt & Road Initiative?

China and the Middle East are interdependent.  China is the world’s largest importer of energy resources; the Middle East is the world’s largest exporter of energy. President Xi’s ‘1+2+3’ framework focuses Sino-Middle Eastern cooperation on energy, infrastructure and high-tech fields. The high-priority plan will increase trade between China and Arab states to $600 billion by 2023. Nearby, China and Iran have a $600bn trade deal in the works.

Whilst China and the Middle East are in an economic matrimony, Middle Eastern states themselves are struggling following a bitter divorce. Iran and Saudi Arabia have shown ongoing enmity towards each other for some time. More recently, the Gulf Cooperation Council (GCC) were divided by the Qatari Diplomatic Crisis, leading Qatar to further aggravate Saudi Arabia by establishing closer ties with Iran.

Sticking to Principles

Both the GGC and Iran are crucial partners for Xi’s Belt & Road Initiative. China needs these rivalrous states to demonstrate a degree of cooperation if the Belt & Road Initiative is to run smoothly. China’s idealistic foreign policy purports that they will not interfere with other nations’ sovereignty and promote cooperation. Will China stick to its principles, or take the lead as the principal economic superpower in the Middle East in propagating it’s Belt & Road initiative.

Political idealism is futile. Indeed, Thucydides has known this since the 5th century.  China may use pragmatism to achieve their visionary goals through abandoning their dreamy directive to cut a deal. Yet China’s diplomatic competence is obvious, and the Middle Kingdom has adhered to their foreign policy principles when brokering the P5+1 Iranian nuclear deal. Additionally, China has organised the Shanghai Cooperation Organisation (SCO) and the Asian Infrastructure Investment Bank (AIIB). Insofar, China has successfully acted on its idealistic intentions. This leads one to conclude that China could stick by their principles and step-in to the power vacuum to become the Middle East’s economic leader. This task would be much harder if China’s SCO allies weren’t sharing the burden.

Following in Putin’s Footsteps 

The SCO is essentially a tool for a Sino-Russian duumvirate to exert economic and political influence in the Far East, Central Asia and the Middle East. Established in 2003, the SCO is committed to regional economic, political and military integration with the ultimate goal of “moving towards the establishment of a democratic, fair and rational new international political and economic order.” The US’s gradual withdrawal from the Middle East has left a growing, and increasingly unstable, power vacuum. In an environment that is no longer unipolar, but multi-polar, the SCO is well-positioned to bring relative stability to the region. Whilst the USA has enforced its will on the Middle East’s many factions, the SCO can offer a multilateral solution wherein the SCO’s various members, led by China and Russia, work together to bring about peace.

Russia’s recent success has evidenced that the Janus-faced Middle East is turning away from the USA. Lakhdar Brahimi, UN ex-envoy, feared the ‘Somaliazation’ of Syria but Putin’s intervention helped prevent this. In 2013, Russia led chemical weapon disarmament talks in Syria. Presently, they’re pushing for  Iranian nuclear disarmament and have undermined the US’s traditional authority through successful military intervention. Russia’s intervention in late 2015 achieved its original objectives, with minimal casualties and minimal costs by early 2016. This is in stark contrast to the US’s prolonged and unsuccessful intervention in contemporary conflicts.

The secret to Russia’s success? Using unilateralism to enforce multilateralism. Wielding their regional influence, Russia forced actors in the Middle East to cooperate. China could copy Russia’s approach, leveraging their economic hegemony to force states to cooperate and utilising the SCO’s smaller members to reach multi-lateral solutions to conflict.

Frayed Ends

Taking on board Russia’s example, China could reach a win-win solution for all countries within their foreign policy framework. Despite this promising outlook, the New Silk Road’s ends are beginning to fray.

The Belt & Road Initiative has already met its first speed bump- the Qatari Diplomatic Crisis. To help resolve this calamity, China has to understand what is driving these events.

The House of Saud’s ascent to the throne would have most likely not have been possible without the Nejd tribe’s support.  The Nejd tribe’s are major members of the Ikhwan  (the Muslim Brotherhood).The Nejd’s support of the Saudi monarchy is highly conditional and dependent on handouts. Depressed oil prices have only further threatened this fragile relationship, which led to Qatar manipulating the situation to their advantage by facilitating for Ikhwan dissenters as it has done so historically.

Saudi Arabia’s oil-based economy is a poisoned chalice, and the Saudi monarchy does not have the antidote. Unable to effectively raise money with oil, the House of Saud’s options are limited. Devaluing the riyal to raise funds may trigger significant deterioration of the domestic economy.  Paradoxically, it appears Saudi Arabia can only survive if they allow their intravenous pipelines to pump poison into their failing financial framework for a while longer.

In a recent CNBC interview, Prestige Economics President Jason Schenker said that:

“If you wanted to know where the downside risk is, it is not in OPEC’s decision or in U.S. driving demand or in global inventories rebalancing. I think China is a big source of concern 

 

Without China, the Middle East’s oil economy would struggle and further destabilise. Just like Russia, Xi can use unilateralism to enforce multilateral solutions to conflicts. If Beijing was to accelerate its domestic oil output decline, or buy GCC oil to store in their Strategic Petroleum Reserve (SPR), then the situation in the Middle East could improve. Saudi Arabia could quell internal dissent with monetary incentive and successfully act on their Saudi Vision 2030. Doing so would limit their internal enemy’s power, and create a strong foundation for stable GCC relations.

Making this loss-lead, Xi would reap benefits in the long-term.  The majority of Gulf States are AIIB. China will see a massive boom in their Belt & Road Initiative’s growth if they enforce multi-lateral cooperation unilaterally. Additionally, Middle Eastern states are likely to join the SCO. Egypt and Syria have submitted observer applications, and Turkey was given the responsibility of managing the SCO Energy Club this year. Saudi Arabia, the UAE, Bahrain and Egypt have already joined an Anti-Terror Quartet that could be easily integrated with the SCO to meet regional security aims. In doing so, China would not deviate from their foreign policy principles because they are not violating the country’s sovereignty and are encouraging mutually beneficial cooperation.

Admittedly, one might postulate that the GCC and Iran would never join the SCO together. After all, they are bitter rivals. In June 2017, Pakistan and India, both hostile neighbours, joined the SCO. There is an economic incentive for the GCC and Iran to do so as they will have access to the markets along the Belt & Road.

Conclusion 

There are many speed-bumps on the road ahead for China. It is unreasonable to suggest China can resolve the Israel-Palestine conflict or discord between Turkey and the Kurds. Yet, it is evident China does have an important role to play in Middle Eastern diplomacy. Using unilateralism to enforce multilateralism, China can take a leading role in the region, stay true to their foreign policy principles and ensure that the Belt & Road not only survives, but also thrives.

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America

Trump’s Presidency and Russian Relationship: The Future

 4 min read / 

Trump Russia

Much has been contested about Donald J. Trump’s love affair with Russia. Questions deserve a thorough and honest investigation. As distasteful and risky it may be, the best outcome of the enquiry is accusations continue to swirl, Trump limps through three more years, and in 2020, he is crushed at the ballot box. The world moves on. If removed from office, odds are Trump whips his base into a frenzy. Only the height and duration of civil unrest is in question. A worse case is that Trump emerges emboldened, eager to settle Putin’s longstanding challenge.

Putin Mocks Trump

The competition is real. Putin’s economic and political dominance gnaws Trump. Putin knows this. So, he taunts the President and dares Trump to employ the same ruthless tactics he exploited to consolidate power and possibly become the world’s richest man. Since Trump only sees green, he took the bait. The race is on to be the world’s first trillionaire.

Russia’s population is 142 million. Its $3.86trn translates into a measly $26,900 per capita GDP. In contrast, the 326 million people of the United States generate $18.62trn in GDP, nearly five times Russia’s total. The US per capita GDP of $57,600 more than doubles Russia’s. Despite Russia’s meek economy and reports  that Putin has embezzled up to $200bn in assets, Putin remains incredibly popular in Russia.

The apathy regarding this unparalleled heist makes Trump and Putin salivate over what they could jointly pilfer from the world economy. To advance their contest, the pair will identify a common threat. US-Russia relations will warm. Under the guise of “Peace through strength,” Russian sanctions will be lifted, and the Magnitsky Act repealed.

The administrative state in retreat, animal spirits will run wild. Trump’s name will be emblazoned across the globe. Countries desperate for jobs will be compelled to forge deals sponsored by Putin and Trump. Ethics be damned, the race to the bottom of the $120trn global economy will prompt a wave of corruption never seen before. Every facet of human decency will be compromised: environmental regulations, free and fair-trade by-laws, intellectual property, and human rights protections. The collusion is real.

In time, complicity will turn to double-crossing. It’s the Trump-Putin way. Makeshift “me-first” trade deals will collapse. Boycotts, divestitures and sanctions will be commonplace. Cooperation will evaporate. New political boundaries will be drawn with little world condemnation.

It doesn’t have to happen this way. Patience is a virtue. The checks and balances of the three branches of government are powerful mechanisms to thwart overt corruption.

Yet, for the impatient who seek Trump’s impeachment or removal via the 25th Amendment, be careful what you wish for. Only Trump can tame his army. To assume Trump will plead mercy at the feet of the administrative state contradicts Trump’s lifelong persona. He will relentlessly counterpunch and encourage his followers to do likewise. The short and long-term political and social risks are astronomical.

If Trump stems the tide, consolidates power and aggressively partakes in Putin’s race for two terms, the risks outstrip his forced removal. The consequences will be multi-generational.

Rope-a-Dope is the Key to Containing Trump

The only path that possibly prevents extensive collateral damage is to check Trump into policy oblivion. Legislators must play rope-a-dope for as long as it takes, even three years if necessary. If Democrats take back both houses in 2018, the tactic will not set up Trump and his base for a final knock-out punch in 2020. For that to occur, numerous members of the GOP must join the effort. They too must throw periodic jabs at Trump then absorb a barrage Trump’s counterpunches.

With foes in every corner, even Trump – the self-proclaimed greatest counterpuncher in history—and his base will wear themselves out well before 2020. Then the decisive knockout punch can be delivered at the ballot box—without collateral damage.

Trump is severely wounded. If he gracefully and peacefully surrenders the Presidency, great. But don’t expect it. Rope-a-dope deployed by both parties is the countries best hope for a peaceful end to the Trump Presidency. Any other scenario risks the once unthinkable; an ‘American Spring’.

Keep reading |  4 min read

Asia

2018 Winter Olympics: North and South Korea will March under a Unified Flag

 1 min read / 

2018 winter olympics

North and South Korean athletes are set to march together in the opening ceremony for the 2018 Winter Olympics, to be held in Pyeongchang.

On Wednesday, South Korea’s Unification Ministry announced that following talks which began earlier this month, both teams have agreed to participate together under the Unified Korea flag – the first time since 1992.

The two nations, who are still officially at war with one another, have also agreed to field a joint women’s ice hockey team and organise a joint cultural performance. Skiiers from both Koreas will train together at a resort in the North and Pyongyang has reportedly said it will allow a small delegation of supporters to attend.

This represents the first major breakthrough in years. Although some cynics are worried North Korea will use it to buy time for the development of its weapons programme, there are promising signs that the Winter Olympics could help to cool rising tensions in the area.

As a sign of good faith, combined drills held by the South Korean and US army have been suspended for the duration of the Olympics.

Keep reading |  1 min read

Asia

Hacks on Cryptocurrency Exchanges Linked to North Korea

 1 min read / 

hacks

A report has linked a hacker group, responsible for targeting crypto-investors and exchanges, to the North Korean state.

The attacks took place against South-Korean crypto-exchanges and included attempts to harvest users’ passwords. The report does not say if the attacks were successful.

The report, by internet technology company, Recorded Future, has identified the attackers as the group Lazarus, known to be associated with the hermit kingdom. The malware was similar to that used against Sony Pictures in 2015, the WannaCry ransomware attack in 2017 as well as the Bangladeshi bank heist in 2016.

Attacks began when cryptocurrencies started to rapidly increase in value. It is believed North Korea favours attacks on cryptocurrency because they are not linked to any bank or government, making attempted heists less politically incendiary.

North Korea has shown a great interest in crypto-currency, potentially as a means for funding itself. In 2017, the elite Pyongyang university started to run courses on the virtual tender.

Keep reading |  1 min read

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