Geopolitics/Geoeconomics Thread - June 2015

[bala]

I briefly talked about the dynamics of R U I C. There is a slight shift happening after DJT / Russia meet at Alaska. Putin and DJT are trying to wrap up Ukraine conflict (on Putin's terms mostly). This leaves the EU and U relationship at odds for a long time. Poor Zels he is relegated to picking up the pieces from the R U tussle. The side effect is that C and R, who were together due to Ukraine with C trying to dictate to R certain terms and conditions, is now at stake. The Alaska tete-a-tete has pushed C into another friendless juncture. Both U and R settling Ukraine leaves C all alone with nothing to lean upon. Perhaps this caused C to reach out to I and anchor something on the eco front at least. Pak is now effectively shunned by C due to Pak and U being pals again. Now the interesting thing is that I and U seem to be initially at odds due to R but R and U are on track to resolve Ukraine, which effectively means the triangle of R U I is being bolstered to the chagrin of C. The U I relationship is going to be driven by factors other than what the US Deep State faction wanted and this is rather vexsome for them. R will try to clinch some more major strategic partnership with I by taking in all favorable windfall factors into consideration. For I it is tails I win, heads I win scenario.

[drnayar]

Meanwhile meloni s Italy has moved over to importing the peacefuls and onto the jokers camp ,

[A_Gupta]

I am told by an ex-Somalian that Türkiye now controls Somalia. I’ll try to find other sources.

[Vayutuvan]

... effectively means the triangle of R U I is being bolstered to the chagrin of C. ... For I it is tails I win, heads I win scenario.

@bala ji, aap ke muh mein ghee shakkar. But that is overly optimistic IMHO. Hope even half of what you are predicting comes true. One of the immediate problems for Bharat right now is what to do with Tejas which needs the GE engines.

[ricky_v]

https://www.foreignaffairs.com/united-s ... ell-newman

This new era will be shaped by weapons of economic and technological coercion—sanctions, supply chain attacks, and export measures—that repurpose the many points of control in the infrastructure that underpins the interdependent global economy. For over two decades, the United States has unilaterally weaponized these chokepoints in finance, information flows, and technology for strategic advantage. But market exchange has become hopelessly entangled with national security, and the United States must now defend its interests in a world in which other powers can leverage chokepoints of their own.

In a little-noticed speech in June, Secretary of State Marco Rubio hinted at the administration’s reasoning. China had “cornered the market” for rare earths, putting the United States and the world in a “crunch,” he said. The administration had come to realize “that our industrial capability is deeply dependent on a number of potential adversary nation-states, including China, who can hold it over our head,” shifting the “nature of geopolitics,” in “one of the great challenges of the new century.”



Although Rubio emphasized self-reliance as a solution, the administration’s rush to make a deal demonstrates the limits of going it alone. The United States is ratcheting back its own threats to persuade adversaries not to cripple vital parts of the U.S. economy. Other powers, too, are struggling to figure out how to advance their interests in a world in which economic power and national security are merging, and economic and technological integration have turned from a promise to a threat.

Washington had to remake its national security state after other countries developed the atomic bomb; in a similar way, it will have to rebuild its economic security state for a world in which adversaries and allies can also weaponize interdependence. In short, economic weapons are proliferating just as nuclear weapons did, creating new dilemmas for the United States and other powers. China has adapted to this new world with remarkable speed; other powers, such as European countries, have struggled. All will have to update their strategic thinking about how their own doctrines and capabilities intersect with the doctrines and capabilities of other powers, and how businesses, which have their own interests and capabilities, will respond.

As China rapidly adapts to the new realities of weaponized interdependence, it is building its own alternative “stack” of mutually reinforcing high-tech industries centered on the energy economy. Europe is floundering at the moment, but over time, it may also create its own alternative suite of technologies. The United States, uniquely, is flinging its institutional and technological advantages away. A failure by Washington to meet the changes in the international system will not only harm U.S. national interests but also threaten the long-term health of U.S. firms and the livelihoods of American citizens.

Weaponized interdependence is an unanticipated byproduct of the grand era of globalization that is drawing to a close. After the Cold War ended, businesses built an interdependent global economy on top of U.S.-centered infrastructure. The United States’ technological platforms—the Internet, e-commerce, and, later, social media—wove the world’s communications systems together. Global financial systems also combined thanks to dollar clearing, in which businesses directly or indirectly use U.S. dollars for international deals; correspondent banks that implement such transactions; and the SWIFT financial messaging network. U.S.-centered semiconductor manufacturing was spun out into a myriad of specialized processes across Europe and Asia, but key intellectual property, such as semiconductor software design, remained in the hands of a few U.S. companies. Each of these systems could be understood as its own “stack,” interconnected complexes of related technologies and services that came to reinforce one another, so that, for example, buying into the open Internet increasingly meant buying into U.S. platforms and e-commerce systems, too. At a time when geopolitics seemed the stuff of antiquated Cold War thrillers, few worried about becoming dependent on economic infrastructure provided by other countries.

That was a mistake for Washington’s adversaries and, eventually, for its allies, too. After the 9/11 attacks in 2001, the United States began using these systems to pursue terrorists and their backers. Over two decades of cumulative experimentation, U.S. authorities expanded their ambitions and reach. The United States graduated from exploiting financial chokepoints against terrorists to deploying sanctions to target banks and, in time, to cutting entire countries, such as Iran, out of the global financial system. The Internet was transformed into a global surveillance apparatus, allowing the United States to demand that platforms and search companies, which were regulated by U.S. authorities, hand over crucial strategic information on their worldwide users.

This was the context in which we first wrote about weaponized interdependence in 2019. By that point, many of the most important economic networks underpinning globalization—communications, finance, production—had become so highly centralized that a small number of key firms and economic actors effectively controlled them. Governments that could assert authority over these firms, most notably the U.S. government, could tap them for information about their adversaries or exclude rivals from access to these vital points in the global economy. Over two decades, the United States had built institutions to assert and direct this authority in response to a series of particular crises.

Moreover, it was fundamentally unstable. American actions would invite reactions by targets and counteractions by the United States. The biggest powers could play offense, looking for vulnerabilities that they, too, could exploit. Smaller powers might seek to use less accountable or transparent channels of exchange, effectively building dark spaces into the global economy. The more the United States turned interconnections against its adversaries, the more likely it was that these adversaries—and even allies—would disconnect, hide, or retaliate. As others weaponized interdependence, the connecting fabric of the global economy would be rewoven according to a new logic, creating a world based more on offense and defense than on common commercial interest.

According to The Washington Post, a document drafted by Biden administration officials intended to limit the use of sanctions to urgent national security problems inexorably shriveled from 40 pages to eight pages of toothless recommendations. One former official complained of a “relentless, never-ending, you-must-sanction-everybody-and-their-sister . . . system” that was “out of control.”


Similar worries plagued export controls. Policy experts warned that technology restrictions encouraged China to escape the grasp of the United States and develop its own ecosystem of advanced technologies. That did not stop the Biden administration, which in its final weeks announced an extraordinarily ambitious scheme to divide the entire world into three parts: the United States and a few of its closest friends as a chosen elite, the large majority of countries in the middle, and a small number of bitter adversaries at the bottom of the heap. Through export controls, the United States and its close partners would retain access to both the semiconductors used to train powerful AI and the most recent “weights”—the mathematical engines that drive frontier models—while denying them to U.S. adversaries and forcing most countries to sign up to general restrictions. If this worked, it would ensure a long-term American advantage in AI.

Although the Trump administration abandoned this grand technocratic master plan, it certainly has not abandoned the goal of U.S. dominance and control of chokepoints. The problem for the United States is that others are not sitting idly by. Instead, they are building the economic and institutional means to resist.

The weapons of interdependence have been proliferating for several years and are now being deployed to counter U.S. power. As China and the European Union began to understand their risks, they, too, tried to shore up their own vulnerabilities and perhaps take advantage of the vulnerabilities of others. For these great powers, as for the United States, simply identifying key economic chokepoints is not enough. It is also necessary to build the state apparatus that can gather sufficient information to grasp the immediate benefits and risks and then put that information to use. China’s approach is coming to fruition as it presses on the United States’ vulnerabilities to force it to the negotiating table. By contrast, Europe’s internal institutional weaknesses force it to vacillate, putting it in a dangerous position vis-à-vis the United States and China.

These fears translated into policy actions as the Chinese Communist Party developed a “whole-of-nation system” to secure China’s technological independence, calling for “breakthroughs in major ‘chokepoint’ technologies and products.” China also began to think about how it could better exploit its advantages in rare-earth mining and processing, where it had gained a stranglehold as U.S. and other companies fell out of the market. China’s power in this sector comes not from a simple monopoly over the minerals, which the country doesn’t fully possess, but from its domination of the economic and technological ecosystem necessary to extract and process them. Notably, these critical minerals are used for a variety of high-tech industrial purposes, including producing the specialized magnets that are crucial to cars, planes, and other sophisticated technologies.

In 2020, Beijing put in place an export control law that repurposed the basic elements of the U.S. system. This was followed in 2024 by new regulations restricting the export of dual-use items. In short order, China built a bureaucratic apparatus to turn chokepoints into practical leverage. China also realized that in a world of weaponized interdependence, power comes not from possessing substitutable commodities but from controlling the technological stack. Just as the United States restricted the export of chip manufacturing equipment and software, China forbade the export of equipment necessary to process rare earths. These complex regulatory systems provide China not only with greater control but also with crucial information about who is buying what, allowing it to target other countries’ pain points with greater finesse.

This is why American and European manufacturers found themselves in a bind this June. China did not use its new export control system simply to retaliate against Trump but to squeeze Europe and discourage it from siding with the United States. German car manufacturers such as Mercedes and BMW worried as much as their U.S. competitors that their production lines would grind to a halt without specialized magnets. When the United States and China first reached a provisional deal, Trump announced on Truth Social that “FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA,” recognizing the urgency of the threat to the U.S. economy. China’s long-term problem is that its state is too powerful and too willing to intervene in the domestic economy for purely political purposes, hampering investment and potentially strangling innovation. Still, in the short term, it has built the critical capacity to reimpose controls as it deems necessary to resist further U.S. demands.

Whether Europe can withstand pressure from Beijing—and, for that matter, from Washington—remains an open question. Europe has many of the capacities of a geoeconomic superpower but lacks the institutional machinery to make use of them. The SWIFT system, after all, is based in Belgium, as is Euroclear, the settlement infrastructure for many euro-based assets. European companies—including the Dutch semiconductor lithography giant ASML, the German enterprise software firm SAP, and the Swedish 5G provider Ericsson—occupy key chokepoints in technology stacks. The European single market is by some measures the second largest in the world, potentially allowing it to squeeze companies that want to sell goods to European businesses and consumers.


But that would require Europe to build its own comprehensive suite of institutions and independent stack of technologies. That is unlikely to happen in the short to medium term, unless the nascent “EuroStack” project, which aims to secure Europe from foreign interference by building an independent information technology base, really takes off. Even though Europe woke up to the danger of weaponized interdependence during the first Trump administration, it quickly fell back asleep.

In fairness, the EU’s weaknesses also reflect its unique circumstances: it depends on an outside military patron. The Russian invasion of Ukraine has heightened Europe’s short-term dependence on the United States, even as European countries struggle to bolster their defensive capacities. The Biden administration put a friendly gloss on economic coercion, coordinating with European governments such as the Netherlands to limit exports of ASML’s machinery to China. At the same time, the United States provided Europe with the detailed intelligence that it needed to wield financial sanctions and export controls against Russia, obviating the need for Europe to develop its own abilities.

One immediate test is whether Europe will use its purported big bazooka, the “anti-coercion instrument,” or let it rust into obsolescence. This complex legal mechanism—which allows the EU to respond to coercion through a broad set of tools, including limiting market access, foreign direct investment, and public procurement—is supposed to allow Brussels to retaliate against allies and adversaries. The instrument was conceived as a response to the threat of Trump’s first administration and hastily retrofitted to provide a means of pushing back against China.

In a remarkable deal with the United Arab Emirates, the Trump administration agreed to facilitate the massive expansion of data centers in the region using advanced U.S. semiconductors despite continued relations between the UAE and China and warnings from policy experts that the United States should not depend on the Middle East for AI.

Nuclear doctrines focused on predicting a single adversary’s responses; today, when geopolitics is shaped in large part by weaponized interdependence, governments must navigate a terrain with many more players, figuring out how to redirect private-sector supply chains in directions that do not hurt themselves while anticipating the responses of a multitude of governmental and
nongovernmental actors.

Successful strategy in an age of weaponized interdependence requires building up these very institutions to make them more flexible and more capable of developing the deep expertise that is needed to understand an enormously complex world in which Washington’s adversaries now hold many of the cards. That may be a difficult sell for a political system that has come to see expertise as a dirty word, but it is vitally necessary to preserve the national interest.

[gakakkad]

Some chatter going on in social media about a think tank (supposedly ORF) being compromised . Prima facie appears to be babu vs babu fight but could be more sinister. Jaishankar or sameer saran could be targets . Interesting times

[A_Gupta]

ORF was supposedly 100% funded by Ambani initially and now to the extent of 60%. EAM Jaishankar's son is something significant in ORF. This ties in with what I mentioned somewhere, that Ambani supposedly betrayed Modi per social media.

[uddu]

Old news. Said to be new toolkit propped up to attack our Foreign minister when they were talking with the Russians and the Chinese.

[uddu]

World Order Influx: Lessons From History by Sanjeev Sanyal

In this insightful speech, renowned economist and historian Sanjeev Sanyal pointed to the events of 1025, when Chola king Rajendra Chola launched a naval expedition against the Srivijaya Empire in Southeast Asia. The Srivijayas had taken control of both the Malacca and Sunda straits and had increased tariffs on passing ships, affecting Chola trade. Sanjeev Sanyal mentioned, “When these temples were destroyed, the financial base of our maritime power was destroyed.” Towards the end of his discourse, Sanyal elaborated that the historical link between financial and military strength remains relevant. “Our ancestors knew that to protect economic power, you sometimes have to be willing to back it with hard power,” he said. He also explained the shifts in world power since World War II, the rise and fall of global superpowers, and the implications for India's role on the world stage.

[A_Gupta]

It has been pointed out before by historians that the source of European power starting from the 1600s was their ability to disrupt and control the within-Asia maritime trade.

[A_Gupta]

The Asahi Shimbun, August 27:

West frets over China’s interest in Vietnam tungsten mine, sources say
https://www.asahi.com/ajw/articles/15990791

HANOI--American and other Western officials are worried a Vietnamese tungsten mine and refinery may come under Chinese control, potentially hampering access to a major source of the critical mineral outside China, people with knowledge of the matter said.

Heightened U.S.-Sino trade tensions have seen China, by far the world’s dominant supplier of tungsten, restrict exports of the hard metal as well as other critical minerals in retaliation for U.S. tariff policies.

The Nui Phao complex in northern Vietnam is owned by Masan High-Tech Materials, a subsidiary of the Masan conglomerate which has flagged its interest in selling the asset, five sources said.

[A_Gupta]

Japan's trade envoy postpones US trip as Tokyo wants faster action on tariffs deal
Japan’s top trade negotiator has abruptly canceled a trip to Washington aimed at issuing a joint statement on a tariffs deal with the Trump administration
https://abcnews.go.com/International/wi ... -125050333

In July, the two sides agreed on a 15% tax on imports of most Japanese goods, effective Aug. 1, down from an earlier 25% rate announced by President Donald Trump as so-called “reciprocal tariffs” on the major U.S. ally. Japanese officials discovered days later that the preliminary deal would add a 15% tariff to other tariffs and objected. Officials in Washington have acknowledged the mistake and agreed to abide by the agreement on a 15% tariff, and to refund any excess import duties that were paid.

So far, that hasn't happened.

“We will strongly request the United States to amend its presidential order to correct the reciprocal tariffs and to issue the presidential order to lower tariffs on autos and auto parts,” Hayashi said.

[A_Gupta]

US reaffirms Greenland's right to self-determination amid political sway allegations
https://www.reuters.com/world/us-reaffi ... 025-08-28/

COPENHAGEN, Aug 28 (Reuters) - The United States' top diplomat in Denmark has reaffirmed Greenland's right to determine its own future, following Danish intelligence reports alleging that private U.S. citizens attempted to sway political sentiment in the Arctic territory.

Chargé d’Affaires Mark Stroh met with Danish and Greenlandic officials in Copenhagen on Wednesday. Denmark summoned him in response to a report by public broadcaster DR, saying at least three Americans with ties to President Donald Trump were suspected of promoting opposition to Danish rule in an effort to encourage Greenland’s secession.

[ricky_v]

apologies, the map of india is wrong

https://www.reuters.com/business/energy ... 025-09-02/

Russia and China gave their blessing to the Power of Siberia 2 pipeline but have yet to agree on pricing, Gazprom said on Tuesday, underscoring President Xi Jinping's disregard for Western demands that he row back from a deepening partnership with Moscow.
The pipeline, which could one day deliver an additional 50 billion cubic metres (bcm) of gas per year to China through Mongolia from the Arctic gas fields of Yamal, hands the world's largest energy consumer greater options to hedge against future reliance on U.S. liquefied natural gas.

Miller said that an agreement had been reached to increase supplies via the existing Power of Siberia pipeline, which runs from Eastern Siberia to China, to 44 billion cubic metres (bcm) a year from 38 bcm.
But the price of gas supplied via the new pipeline - one of the key factors for understanding the cost of building the pipeline and how those costs will be shared amongst the parties involved - will be agreed separately, Miller was quoted as saying.

The price, Miller said, would be lower than the price charged by Gazprom to European buyers due to the vast distances and terrain over which pipelines had to be built.
The Kremlin said that 22 agreements had been signed during Chinese talks, including a deal on strategic cooperation between Gazprom and China National Petroleum Corporation, but it gave no details. Nor did China.


Building a gas pipeline from the vast Bovanenkovo and Kharasavey gas fields of northern Russia across the wilderness of Siberia to Mongolia and then to China would be the world's biggest and most capital-intensive gas project, Miller said.
China is Russia's biggest trading partner, the biggest purchaser of Russian crude and Russian gas, the second-biggest purchaser of Russian coal and the third-biggest purchaser of Russian LNG, according to the Kremlin.
Gazprom supplies natural gas to China through a 3,000 km (1,865 mile) pipeline called Power of Siberia under a 30-year, $400 billion deal launched at the end of 2019 and supplies are expected to reach the planned capacity of 38 bcm this year.
Miller said there had also been an agreement to increase the gas China buys through a pipeline from Sakhalin Island in Russia's Far East to 12 bcm annually from a prior agreement for 10 bcm.