China has the power to end the Ukraine war – Asia Times

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European leaders are becoming more and more annoyed by China’s role in making the conflict in Ukraine. Some have even made a public threat to censure Russia if it continues to supply it with the resources necessary to build more arms.

And they are appropriate to focus on China’s position of power. Russia is now so dependent on Russia’s only big business, which is still risking losing ground to its regime, that China may properly compel Vladimir Putin to put an end to the discord.

After Russia’s full-scale invasion of Ukraine in February 2022, the degree of its economic dependency became visible comparatively immediately. Just a few months after, things were not going to prepare.

Russia decided to cut almost all of its oil exports to the West in order to force Western nations that are supporting Ukraine. Before the war, Russia had provided about 40 % of Europe’s gas.

Europe finally managed to extricate itself from Russia’s offer, despite initially causing a crisis and a rise in bills across the continent. They did this by replacing fuel with other energy sources, in part, and by substituting imported gas from Russia with gas from different nations, including the US.

Electricity costs in Europe are currently around at pre-war levels. Gas prices have dropped, despite them still being great, and storage facilities are expected to be almost complete by the end of the year.

Russia now has to deal with selling its oil, which is a significant issue.

Gazprom, the Russian state-owned power large, suffered a financial loss in 2023 for the first time in more than 20 times. Until then, the traditions and tax income from the business contributed approximately 10 % of the country’s resources.

Income from oil exports has even decreased. Russian oil is forbidden in European nations, but the state is forced to sell it for less, covering the additional costs of shipping it to countries like China and India, while traditional transporters refuse to hazard carrying it because of the country’s refusal to do so.

Geographical factors make things worse for Russia with natural oil. China is the only possible customer that is big enough to warrant a new pipeline to replace the one that served Europe at the time. But given this privileged location, China feels able to demand the oil at a great discount.

In this kind of negotiation position, China has the upper hand.

Russia can only sell gas to China ( at the required amounts ) but China can purchase it anywhere in the world. The intensity of a war is therefore, while China has no pressing energy requirement that it can meet.

Bargaining room

Russia’s dependent on China also affects other economic areas. Since it was disconnected from the global banking system in 2022, the Chinese yuan now accounts for 54 % of trades on Russia’s stock exchange. If China begins imposing similar sanctions, it has no viable solution to that wealth.

Perhaps more important for the war, China is responsible for around 90 % of Russia’s import of “high priority” double- use goods – electronic components, radars, sensors– without which it could never build advanced military hardware. Again, there is no other dealer.

With just North Korea and Iran on your side, which are both nations that are subject to severe economic sanctions, it is difficult to get a battle. In essence, this means that China is then able to impose any demands on Russia.

And both have a similar negotiation status to each other and have much to gain from possible agreements between China and the West.

For instance, China is already dealing with serious home financial issues of its own. One of these is brought on by professional overcapacity and the need to get customers for all the goods it produces.

But the US has just imposed a 100 % border tax on electric cars from China, and 50 % on solar cells. Similar to how the EU is pursuing, it might even think about inviting Chinese companies to create electrical vehicles in Europe and share their technology.

Given the immediate need to fund the energy transition, punishing inexpensive goods that could reduce carbon emissions may seem like a self-defeating plan. Therefore, maybe the West wants to avoid becoming too reliant on China for the same negotiation factors that cause Russia’s existing standing to be so weak.

However, the harmony is different. China needs West-oriented clean business potential and know-how, as China builds more solar power each year than the rest of the world combined.

A price is basically an additional revenue burden on Western consumers because Europe is still going through difficult economic times. People would gain from the toning down of the trade war, and China has something very important to sell.

For all intents and purposes, China currently has the majority of Russia and has the potential to use this influence to put an end to the conflict in Ukraine.

Renaud Foucart is Top Lecturer in Economics, Lancaster University Management School, Lancaster University

The Conversation has republished this essay under a Creative Commons license. Read the original post.

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Russia’s new combat icebreaker built for Arctic dominance – Asia Times

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Russia’s fresh battle greeting, known as the Project 23550 Ivan Papanin, has embarked on stock sea trials, signaling Russia’s intensified proper focus on the Arctic amid an emerging New Cold War.

The greeting is reportedly armed, capable of carrying cruise missiles, and was reported by The War Zone this quarter.

The vehicle, constructed at the Admiralty Shipyards in St Petersburg, was originally scheduled for commissioning in 2023 but has faced disruptions, largely due to the ongoing conflict in Ukraine, The War Zone statement said.

The Ivan Papanin’s arsenal includes a 76mm AK-176MA weapons and can be equipped with intermodal missiles for Klub and Kalibr cruise missiles, which would significantly improve its battle skills.

Russia has a growing fleet of about 40 icebreakers and ships with the special Project 23550 group, which was created specifically for battle and breaking through snow up to 5 feet wet.

Russia’s addition of the Ivan Papanin to its icebreaker fleet is a result of its more considerable interests in the Arctic and its military strategy, which are mainly driven by complex and interconnected economic and security issues.

In a March 2020 content for the Center for Strategic and International Studies ( CSIS), Heather Conley and other authors make mention of Russia’s military presence in the Arctic as a means of enhancing land safety by preventing foreign incursions as the place attracts more foreign investment, secures Russia’s financial future, and provides a staging area for power projection in the North Atlantic.

Conley and others claim that Russia views the Northern Sea Route ( NSR ), a 5, 600 kilometer long waterway that runs from the Bering Strait to the Kara Sea, as a strategically important internal waterway. They point out, in contrast, that the majority of the international community views the NSR as a global transit.

Beyond controlling sea lines of communication such as the NSR, John Grade mentions in a March 2024 US Naval Institute ( USNI ) article that the Arctic holds 13 % of the world’s undiscovered oil reserves, 30 % of undiscovered natural gas and US$ 1 trillion worth of valuable minerals like palladium, cobalt and nickel, which are in demand for various high- tech industries.

As a result of global warming, those resources are causing a global search for them. Canada, the US and Scandinavian countries have a substantial Arctic presence. China officially designated itself as a “near-arctic state” in 2018, setting the stage for intense power competition in the previously remote and inaccessible frozen region. &nbsp,

Grade notes that Russia applies a” first to market” strategy by granting international maritime traffic access to claims over increasingly open waterways. In line with that, Conley and others point out that Russia has restricted the passage of foreign warships without a 45-day notice and the government’s approval and that it has given bureaucratic control of the NSR to Rosatom, its nuclear power agency.

Regarding Russia’s militarization of the Arctic, Grade claims that Russia has stationed long-range cruise missiles capable of hitting Canadian and US targets, its bombers testing northern approaches ‘ defenses, and the deployment of a cruise missile submarine off its Pacific coast.

Further, Michael Paul and Göran Swistek, in a February 2022 Stiftung Wissenschaft und Politik ( SWP ) paper, mention that Russia is prioritizing the expansion and modernization of its Northern Fleet, which aims to project power beyond its “brown” coastal waters into the Atlantic and Pacific.

According to Paul and Swistek, the Northern Fleet is pivotal to Russia’s nuclear deterrence, economic interests and resource protection, making it the most significant military presence in the Arctic. Its upgrade to an autonomous military district in January 2021 underscores the Arctic’s significance in Russia’s national defense strategy.

They mention developments that demonstrate the strategic importance of the Arctic to Russia’s interests, such as the addition of new military installations, the demonstration of thick ice-capable nuclear submarines, and the addition of Russia’s contentious “doomsday” Poseidon nuclear-armed underwater drone to the fleet’s arsenal.

Janis Kluge and Michael Paul state in a SWP paper from November that the Northern Fleet’s top priority is to defend Russia’s nuclear ballistic missile submarines ( SSBN), which make up two-thirds of its naval nuclear deterrent.

In a conflict, the fleet would defend its SSBNs and establish a second-strike capability by blocking hostile forces from the Russian Arctic while defending its SSBNs.

They point out that while Russia maintains a defensive position in the Arctic, it is prepared for an uprising in the event of a conflict, including potential offensive operations to defend the bastion and possibly occupy parts of northern Scandinavia.

However, the Ukraine war may have significantly impacted Russia’s Arctic military posture. Russia’s strategic deterrent posture may not have been affected by the ongoing conflict, but its implications may have a drawn-out effect at both operational and tactical levels.

Colin Wall and Njord Wegge mention in a January 2023 CSIS article that Russia’s Arctic military branches, particularly the Northern Fleet, maintain a credible second-strike nuclear capability despite the enormous material and human costs of the Ukraine war.

Sanctions may have an impact on Russia’s defense industry in the long run, potentially lowering the Northern Fleet’s formidability in five to ten years, but Wall and Wegge note that while Russia’s short-term threats to the West via naval and air assets remain largely unaffected.

In particular, they say that Russia’s scarcity of precision munitions could deter offensive measures against Arctic NATO allies. They point out that replacing the short-range Pantsir missile systems that were lost in Ukraine may pose challenges, even though Russia’s air defense capability is still present.

However, Wall and Wegge point out that Russia’s increasing use of “hybrid warfare” strategies in the Arctic suggests that Russia may favor hybrid tactics to exert influence and create uncertainty given that Russia has fewer conventional military forces there.

In a paper from the European Leadership Network in August 2023, Katarina Kertysova and Gabriella Gricius point out that since February 2022, Russia has used four trends in its hybrid warfare strategies in the Arctic, including a rise in cybercrime, intrusive infrastructure interference, espionage, and criminal activity.

Kertysova and Gricius say that cyber operations, notably distributed denial of service ( DDOS ) attacks, have surged across Arctic nations, targeting governmental systems and electoral processes.

They also say critical infrastructure, such as undersea cables and pipelines, has also faced increased threats, with incidents like the Nord Stream pipeline sabotage highlighting vulnerabilities.

According to Kertysova and Gricius, espionage efforts have increased, with accusations of Russian spying in territorial waters using civilian vessels. Additionally, they say criminal activities have emerged as a new tool in Russia’s arsenal, further complicating the Arctic’s fast- shifting security landscape.

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How Indonesia’s Prabowo will see the world – Asia Times

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JAKARTA: Despite having the fourth-largest population in the world, boasts the largest Arab politics on the planet, is at the center of a crucial region in terms of geopolitical issues, and consistently punches below its weight on the international stage.

The non-aligned movement’s leader Sukarno and its leader Suharto, who played a key role in the Cold War, have kept a low profile since democratization in 1998.

As political leaders have focused on promoting a post-authoritarian social order while promoting economic growth,” a thousand friends and negative enemies” has become a national anthem.

New President- elect Prabowo Subianto, but, properly herald a more effective approach to Indonesia’s international matters.

For the past century, Indonesian foreign policy has run on a somewhat successful driver. When he took office in 2014, president Joko Widodo, aka Jokowi, declared to his supporters that he would never afterwards waste his time in this manner and that he would merely change his mind after being prodded.

Indonesia’s international affairs were in the hands of Foreign Minister Retno Marsudi, a career diplomat who adhered to Indonesia’s traditional place of non-alignment between great powers while strengthening regional relationships, with the exception of a deluge of national politics around the G20 hosted in Bali in 2022.

Prabowo, officials say, can be expected to get a far greater interest in foreign policy. Unlike Jokowi, Prabowo, 72, has spent much of his living overseas and is comfortable doing business in English.

Insiders claim that he is eager to leave a lasting reputation, an impulse that frequently prompts leaders to appear to successes abroad, despite the decades of hard work he has pursued the presidency. His rumored poor health and his age probably give off a sense of urgency.

What will this then imply for both the area and the rest of the world? Prabowo, the nation’s present defense minister and a previous special forces common, is known to have a firm preoccupation with Indonesia’s sovereignty, a short- fuse temper and a penchant for away- the- cuff comments.

At the same time, officials argue he is finally a realist. He wo n’t likely get too far away from Indonesia’s customary policy of careful non-alignment and good ties with all, which Prabowo has already rhetorically committed, along with fiery asides about the need for greater national strength, thanks to geopolitical realities and a talented foreign ministry bureaucracy.

Some credit the original president Abdurrahman Wahid, also known as Gus Dur, whose cautious career diplomats kept his frequently innovative foreign policy inclinations under control.

On the main political problem of rising US- China conflicts, Indonesia, like most ASEAN powers, has much interest in being drawn into a duel.

China is Indonesia’s second-largest investor, and it actively participates in important infrastructure tasks and the corporate metal industry. There are powerful opportunities to keep relationships on an even keel despite tensions over China’s nine-dash series, which overlaps with some of Indonesia’s regional waters.

America’s economic relationship, on the other hand, is commonly viewed as unsatisfactory but the US is also valued as a security companion, weapons supply and large counterweight to China. Prabowo, who has long emphasized the value of military power and is looking to international partners to support an ambitious military modernization program, holds this to be especially significant.

So far, China has arguably played a defter hand in wooing Prabowo. That was apparent when Prabowo was invited for an official visit to Beijing before he was formally proclaimed president, which was a strange step.

The US, meanwhile, has reportedly left Prabowo feeling somewhat slighted. The Americans notably waited until his victory was formally approved over a month later as ambassadors gathered to congratulate him on his victory on February 14.

The ex-soldier’s alleged interest in Prabowo’s ability to enter the US while serving as defense secretary was also reportedly piqued by the complication that allegedly prevented him from entering the country even after a visa ban related to allegations of human rights abuses dating back to the 1990s was lifted.

Still, there’s little sign these sore feelings will greatly affect Prabowo’s foreign policy. Despite his own feelings for Indonesia and the US, Prabowo consistently strengthened them, including by increasing joint military exercises.

Indeed, there’s a certain expectation in Jakarta that Prabowo’s preoccupation with security might motivate him to put more distance from China than Jokowi, who visited the country eight times in 10 years as president.

Prabowo is expected to take a stronger stand against Chinese intrusions into Indonesian territorial waters, though few people see him going as far as the Philippines, which has dramatically changed its attitude and behavior toward China under Ferdinand Marcos Jr.’s US-aligned rule.

Indonesian stalwarts on foreign policy seem to welcome this as a necessary correction from Jokowi’s conceited lack of understanding of the situation.

Prabowo’s ostensible desire to contribute more to the world might inspire him to raise Indonesia’s voice on current crises. In 2023, at the Shangri- La Dialogue defense talk shop in Singapore, he shocked many, not least the Indonesian foreign ministry, by using his speech to propose a peace plan for Ukraine.

He once more reiterated his peace proposal at the conference this year, giving his support for Indonesia’s participation in a fictitious UN peacekeeping force in Gaza, though this time the foreign ministry appears to have been informed in advance.

Myanmar, where the coup-installed junta’s position appears more vulnerable on the battlefield, might conceivably also draw his attention as the risk of regional blowback rises.

Given that the conflicts are unresolvable and that Indonesia has no known influence over developments in Gaza or Ukraine, how much he could accomplish in any of these foreign policy areas is still a mystery.

Myanmar, which is technically still a member of ASEAN, may offer opportunities for Indonesia to serve as a mediator between the military and rebel groups. In the late 1980s and early 1990s, Indonesia successfully facilitated the mediation of peace in Cambodia.

Any successful intervention in Myanmar or other countries would require close cooperation with his foreign minister and the diplomatic bureaucracy. Crucially, Prabowo is expected to replace Retno as the nation’s top diplomat.

The minister has typically been a technocrat who has risen through the bureaucratic ranks and whose personality aligns with the president’s since the Reformasi era. However, it’s already rumored that Prabowo might use a former prime minister or other ally.

Roesan Roeslani, businessman and former ambassador to the US who played a key role in Prabowo’s presidential campaign, Fadli Zon, a member of Prabowo’s Gerindra party, Dino Pati Djalal, former deputy foreign minister and key foreign policy advisor under president Susilo Bambang Yudhyono, and Meutya Hafid, a Golkar party member and chair of the parliamentary foreign policy committee, have all been suggested as possibilities.

While all would be unconventional choices, most would likely be serviceable, though there may be doubts about their mastery of the bureaucracy.

The only person who stands out is Fadli Zon, a combative politician known for his ties to Islamist organizations, his admiration for Russian President Vladimir Putin, and his blatant prejudice against Chinese Indonesians. whose appointment to the top position would alarm everyone, both domestically and abroad.

Who Prabowo eventually settles on, technocrat or otherwise, will perhaps be the best indication of the priorities of a man who, despite being a veteran of Indonesia’s politics, policymaking and military affairs, retains a streak of unpredictability and penchant for springing surprises.

Joseph Rachman&nbsp, is a Jakarta- based freelance journalist covering&nbsp, Indonesian&nbsp, and ASEAN news. Follow him on X at @rachman_joseph

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Indonesia rebuffs China’s Global South trade drive – Asia Times

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With Indonesia’s announcement to implement a 100 to 200 % tax on China’s labor-intensive goods, Beijing’s efforts to boost trade relations with nations in the Global South have taken a hit.

The fourth-largest country in the world is drafting rules to implement anti-dumping duties and protect measures on cheap Chinese goods like shoes, clothing, electronics, ceramics, and bags, according to several Indian officials over the past couple days.

On June 27, Finance Minister Sri Mulyani Indrawati announced that she will collaborate with the Minister of Trade and the Minister of Industry to create regulations enforcing the enactment of Anti-Dumping Duties and Safeguard Measures ( ADD and SM) on Chinese products. &nbsp,

According to Indonesian Trade Minister Zulkifli Hasan on June 28, the steps will help the country combat the effects of the continuing trade dispute between China and the US. He said the new China-specific tariffs will go into effect once the relevant legislation is published. &nbsp,

He added that Indonesia may follow the US’s example by imposing tariffs on imported clothing and ceramics to ensure its little manufacturers can survive and prosper. &nbsp,

Indonesia’s fresh tariffs go along with China’s plan to advance its Global South method, which rely on emerging areas in Southeast Asia, Africa, and South America to accept Chinese goods that are currently facing US trade barriers as a result of the ongoing Sino-US trade war.

Nearby textile associations have asked the government to move in after an flood of cheap products apparently hurt their businesses, according to Budi Santoso, the industry ministry’s director- general of international trade. He stated that the Indonesian Trade Safeguards Committee is conducting an investigation and may make a statement to the state in due course. &nbsp, &nbsp,

At least 13, 800 textile workers have been laid off this year as a result of local textile makers closing their factories as the domestic market is increasingly flooded with imported goods, according to Ristadi, president of the Confederation of Indonesian Workers ‘ Unions ( KSPN). According to him, there could be as many as 50 000 lay-offs in reality. &nbsp, &nbsp,

Ristadi claimed that the influx of closures was mostly caused by a change in rules earlier this year that eased import restrictions on ready-made clothing. &nbsp,

He Wenping, a professor at the Institute of West- Asian and African Studies ( IWAAS ) at the Chinese Academy of Social Sciences ( CASS), wrote in an article published on Monday that “it is unfair that Indonesia changed its own import regulations to import more goods but then criticized China’s so-called “overcapacity.” &nbsp,

She argued that Indonesia may reconsider its deal plan if it wants to cooperate with China in expanding its tourism industry and that it would not tolerate any behavior that disparages Chinese goods in the name of “overcapacity.” &nbsp,

According to Indonesia’s Central Statistics Agency, the Southeast Asian country’s bilateral trade with China fell 14.7 % to US$ 127.1 billion in 2023 from$ 149.1 billion in 2022. &nbsp,

During the same period, China’s exports to Indonesia fell 12.8 % to$ 62.2 billion from$ 71.3 billion while China’s imports from Indonesia plummeted 16.5 % to$ 64.9 billion from$ 77.7 billion. &nbsp,

Indonesia’s trade deficit with China contracted to$ 2.7 billion last year from$ 6.4 billion in 2022. Indonesia’s exports to China contain natural substances such as awaruite ( an alloy of nickel and iron ), ash, fuel and palm oil.

China’s imports to Indonesia include broadcasting products, smartphones, laptops, building vehicles, metal plates and electrical appliances. &nbsp, &nbsp,

Last year, China shipped about$ 500 million worth of toys,$ 1 billion of footwear,$ 2.5 billion of textile products and$ 430 million of ceramic products to Indonesia. About 7 % of China’s exports to Indonesia came from these four different types of light market products. &nbsp,

Didi Sumedi, producer standard for National Export Development at Indonesia’s Ministry of Trade, said in early 2024 that the country aims to boost its exports to China again to approximately$ 65- 70 billion this year. &nbsp,

A Sichuan-based columnist named Xiaoying wrote in an article published on Tuesday that” the rationale behind Indonesia’s 200 % tariff on Chinese goods is a far-fetched.” ” Is the proposed new taxes really overcome Indonesia’s problems from the source”?

People in a velvet factory in China. Photo: Wikimedia Commons, Lindsay Maizland

The anonymous author claimed that the pressure on Indian businesses was not caused by Chinese goods but rather by the changing environment in worldwide trade markets. Indonesia may also try to figure out its own advantages, the author argued, while China has maintained its profitability by improving its companies. &nbsp,

Xiaoying wrote that “blindly imposing tariffs against China may harm the basis of Sino-Indonesian relations and create more issues for Indonesian trade.” ” I believe Indonesia will not choose to leave China because the two countries have very promising assistance prospects,” he said.

Another Chinese commentators cited another instance of Asia’s growing protectionionism, which is related to India’s latest discussion of imposing tariffs on Chinese metal imports. They claimed that the Sino-US business war’s spillover effect will have an affect on both regional economic cooperation and international relations.

Chinese President Xi Jinping made the remarks at the Conference marking the 70th celebration of the Five Rules of Calm Cooperation in Beijing on June 28 that “developing governments should work together to stabilize the world and contribute to resolving issues around the world.” &nbsp,

According to Xi, China has started the Five Principles of Calm Coexistence in an effort to shield the interests and aspirations of small and weak nations from power politics.

China’s most powerful chief added that the principles have established a significant academic foundation for a more just and equitable global purchase and absolutely oppose imperialism, colonialism, and hegemonism.

Beijing has referred to the Five Principles of Calm Coexistence as Xizang since last year as the name of the document that former Chinese Premier Zhou Enlai first proposed in 1953 during discussions with the Indian government regarding Tibet-related border issues.

Zhou traveled to India and Myanmar in June 1954, where he signed combined remarks with the leaders of the two countries, affirming the five tenets as the foundation of their relationship.

The Asian-African Conference held in Indonesia in 1955 affirmed the importance of the five principles, leading to the formation of the Non-Aligned Movement, which, ironically, was spearheaded by Indonesia to increase the political liquidity of the Global South in discussions with developed countries. &nbsp,

Read: Beijing: fresh Treasury rules sum to ‘ decoupling’

Following Jeff Pao on X: &nbsp, @jeffpao3

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China tensions ripping political rifts in the Philippines – Asia Times

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The most recent conflict in the South China Sea, in which Chinese maritime forces were forced to board and disarm Asian military personnel during a resupply mission, has strained the country’s once-unified administration and exposed fault lines.

According to what available information, the most recent Philippine rotation and resupply ( RoRe ) mission to the disputed Second Thomas Shoal, which sits a de facto Philippine military base atop the stricken BRP Sierra Madre vessel, was not coordinated by relevant government agencies.

The Philippine government’s contradictory statements following the unprecedented incident, which could have easily sparked an armed conflict after a Filipino serviceman lost a thumb in the melee, have highlighted divergent opinions at the highest levels of government regarding how to deal with China’s growing assertiveness in the nation’s Exclusive Economic Zone ( EEZ ).

The newly established National Maritime Council’s executive director, Lucas Bersamin, generally dismissed the tragedy as “probably a mistake or an incident” despite various best officials’ powerful words blaming it with details that were trickling in after days of delay.

Soon after, Philippine Defense Secretary Gilbert Teodoro Jr, yet, insisted that the government was not downplaying the “aggressive and improper usage of power” by China. He maintained that what took place was” ]a ] deliberate act of the Chinese officialdom to prevent]the Philippines ] from completing]its ] mission”.

Social divisions in the face of a political crisis are certainly not new to the Philippines, which is known for its chaotic and contentious democracy.

Filipino legislators publicly criticized the country’s political handling of the Scarborough Shoal problems, which led to China’s de facto annexation of the South China Sea.

During Rodrigo Duterte’s polarizing presidency, who openly criticized China’s proper favoritism while criticizing European allies over historical and human rights-related issues, there were also political and ideological divisions at play.

Duterte and even his own political allies in the then-governing PDP-Laban group fought at one point, most notably Manny Pacquiao, a former legislator who took a more vehement stance against China in the wake of the Whitsun Reef problems in 2021.

In a report pictures, former Chinese president Xi Jinping shows Rodrigo Duterte his approach to the then-President of the Philippines. Photo: Asia Times Files / AFP

In the early times of his law, Marcos Jr., who ran and won easily on a “unity” system, managed to maintain a sense of coherence in his rates.

This was particularly true on the foreign policy before, as the Filipino president took a more confrontational attitude in the South China Sea, which was well-liked by both the Filipino populace and the protection establishment.

Over 90 % of Filipino voters favor a more assertive stance, including restoring control of the Philippine-claimed islands that are under the control of China, according to authoritative surveys.

Amid an uptick of nationalist sentiment, but, innovative politicians and optimistic officials, who were mostly motionless on Duterte’s pro- Beijing policies, began brandishing their patriotic credentials.

Members of Congress, the Senate, and different branches of the government began making extraordinary travel trips to disputed landmarks like Thitu Island, posing as patriotic leaders.

In addition, veteran politician Teodoro Jr., a long-time Duterte supporter who once offered to run for Sara Duterte for a possible joint solution in the 2022 primaries, took over the Department of National Defense.

He was given the same position by Duterte on numerous occasions while under the Gloria Macapagal Arroyo administration ( 2001-2010 ).

A quick and dramatic change in the world’s defence policy was overseen by Teodoro Jr., who was barely a year old when he was in charge of his old office. That included the introduction of the <a href="https://manilastandard.net/?p=314410145″>Comprehensive Archipelagic Defense Concept ( CADC ), which aims to transform the Philippines into a modern and capable maritime power in the 21st century, the implementation of the Philippine-US Enhanced Defense Cooperation Agreement ( EDCA ), joint patrols and massive wargames with like-minded powers, and the rapid modernization of key Philippine military installations.

In the interim, senior generals like previous military chief and interior minister Eduardo Ano took over the National Security Council, and former Supreme Court main fairness Lucas Bersamin became Marcos Jr.’s executive director.

Romeo Brawner, a highly respected and well-known former spokesman for the Armed Forces of the Philippines ( AFP), was appointed as the country’s commander, while seasoned bureaucrats like Jonathan Malaya and Jay Tarriela, who have established leadership positions in the National Security Council and the Philippine Coast Guard, respectively, have taken the lead.

In many ways, Marcos Jr managed to assemble a “dream group” to handle his South China Sea scheme, which features a proactive” clarity initiative”, a superior public diplomacy campaign, robust defense diplomacy and extensive development of maritime security capabilities.

Yet, when China warned that its persistence was” stretched to the limit,” it began to use extremely aggressive “gray area” tactics to impose its will in the contested waters, the Philippines experienced a rude awakening.

First, China formally imposed fresh sea laws that made it possible for its coast guard to detach any “foreign trespassers” across its great nine-dash line region of claims across the South China Sea basin.

Even though the Philippine RoRe patrol vessel posed a direct threat of a military conflict, Chinese forces surged and then boarded it.

China’s growing appetite for risk and willingness to use its preponderance of force has revealed the limitations of the Philippines ‘ more muscular approach. On the one hand, Manila was forced to downplay the incident because it was perceived as having a reluctance to defend disputed maritime features.

The Joe Biden administration has shown little interest in offering direct military support in response to China’s non-kinetic use of force, which seriously injured at least one Filipino service member, despite a tough re-election campaign and numerous geopolitical flashpoints across the Eurasian landmass.

Additionally, the most recent incident has confirmed earlier rumors of rifts between National Security Advisor Ano and Defense Secretary Teodoro Jr. within the Philippine security apparatus.

Gilberto” Gibo” Teodoro Jr. holds his first press briefing as the newly appointed secretary of the Department of National Defense ( DND ) in Camp Aguinaldo, Quezon City on June 07, 2023. Image: X Screengrab

The Ano led by the National Task Force for the West Philippine Sea (NTF- WPS), but the most recent RoRe mission reflected the defense chief’s unilateral prerogative and did not fully coordinate with other organizations.

Some critics have suggested that this was likely motivated by Teodoro Jr.’s political ambitions, who may be considering running for office in the near future. Some commentators have cited the difficulty of repressing a powerful adversary like China and the real differences between top leaders.

Teodoro Jr. has openly questioned the wisdom of diplomatic relations with China on numerous occasions, a surprisingly hardline position that contrasts with other Cabinet members.

” It’s not fruitful. In one of his interventions last year, Teodoro Jr. said in reference to China that there should be bilateral discussions, but only when we can demonstrate that they are genuine and when we can be certain, that is is my personal belief.

He continued, underscoring his perception of a results-oriented diplomatic approach by saying,” It must be based on fundamental principles and it must be based on sincerity, that it shall not be used merely as a weapon in order to restrain the Philippines.”

Other senior government figures, in contrast, have stayed in the game of engagement, with Executive Secretary Bersamin most recently arguing that diplomatic solutions to recent conflicts between Manila and Beijing.

The” transparency initiative” of the government, which was spearheaded by the Philippine Coast Guard in collaboration with the National Security Council, has been a major sticking point for the government’s future and has consistently and loudly exposed China’s aggressive tactics in the disputed waters.

Analysts now wonder if the Marcos Jr. administration will change its name and slurp China’s aggressive tactics for a new mode of vivendi in the disputing regions, particularly in regards to resupply missions to the Second Thomas Shoal.

The Phillippines ‘ ship, The Sierra Madre, served as Second Thomas Shoal’s guard station. Photo: US Naval Institute

Meanwhile, the Marcos Jr. administration has been under pressure from Beijing-friendly organizations in the Philippines to change their course following the most recent incident. Most notable is Duterte’s criticism of his successor for unnecessarily escalating tensions with China by more closely aligning with US interests.

Duterte has claimed that his Beijing-friendly foreign policy succeeded in ultimately preserving an element of stability in the South China Sea despite asserting Philippine claims in the disputed areas.

” We did n’t have a conflict with China then. We were permitted to fish both inside and outside the area. No one was bothering us and there was no territory issue, Duterte claimed in a recent episode of his television show, pressuring Marcos Jr. to adopt a more cordial attitude toward China.

Follow Richard Javad Heydarian on X at @Richeydarian

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Cultural differences impede trade for most nations — but not China – Asia Times

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It’s a widely accepted notion among economists that cultural differences can pose a significant barrier to trade. The larger the cultural gap between two countries – judging by differences in language, customs, values and business norms – the more challenging and costly trade relations become. This is a recurring theme in research.

But there’s one big exception to the rule: China. As an applied economist with a keen interest in how culture influences trade, I’ve conducted several studies of the dynamic. In one such effort, two colleagues and I meticulously analyzed China’s trade relationships with nearly 90 countries over 16 years.

Our research uncovered a distinctive pattern: Unlike many other nations, cultural differences rarely influence the scale of China’s trade activities.

Bridging cultural gaps

Countries have various tools to minimize the effects of cultural differences on their trade. Cultural exchange programs, bilateral trade agreements and international trade shows have shown remarkable success in fostering mutual understanding, easing trade negotiations and overcoming cultural barriers.

However, these options are available to all countries. What makes China unique?

I suspect that China’s national trading strategy, involving state-backed export industries and substantial global infrastructure investment, is a big part of the answer.

By aligning itself with the economic development needs of its trading partners, China has been able to minimize the negative effects of cultural differences on its trade. It’s a strategy that has proved to be remarkably effective.

A closer examination of China’s trade ventures in Africa, the Middle East and Latin America — all regions with significant cultural differences from China — paints a vivid picture of this observation.

Xu Jianping, a Chinese official, stands behind a podium, speaking to a room full of professionals in business dress. Behind him, a sign in Chinese and English reads, in part,
Chinese official Xu Jianping speaks during the opening ceremony of a photography exhibition highlighting China-Africa cooperation under the Belt and Road Initiative in Nairobi, Kenya, on March 22, 2024. Photo: Han Xu / Xinhua via Getty Images / The Conversation

Despite its cultural differences with nations on the African continent, each with its own unique traditions, languages and customs, China has built a multibillion-dollar trade network in the region that spans industries from mining to telecom.

China’s engagement in Africa is facilitated by a combination of local infrastructure investment, affordable technology provision and favorable loan terms. These partnerships are more about creating symbiotic relationships and less about efficiency. This facilitates market access and helps China to overcome cultural barriers.

In the Middle East, too, China has made significant inroads by aligning itself with the region’s development goals, such as those outlined in Saudi Arabia’s Vision 2030 and the United Arab Emirates’ Centennial 2071.

China’s Belt and Road Initiative complements these long-term development plans, offering the capital investment and construction expertise needed to bring ambitious infrastructure projects to life.

China’s presence in Latin America has also grown substantially over the past decade. Despite the geographical and cultural distance, China has become one of the top trade partners for countries such as Brazil, Chile and Peru.

This relationship is built on reciprocity: Latin American countries supply raw materials and agricultural products in exchange for Chinese investment in the infrastructure and manufacturing sectors.

Again, this is a strategy that hinges on pragmatic economic interactions focused on mutual benefits and development goals.

Strategic adaptability

Some might argue that trading with China is an obvious choice due to its size and influence. The economic incentives include access to China’s population of over 1.4 billion and its significant role in global value chains, especially in electronics, textiles and machinery. As China’s influence in global markets grows, US companies also face competitive pressures to maintain their market positions.

However, China’s trade practices, frequently entangled with governmental intervention, potentially undermine market efficiency — an established economic objective — in numerous ways.

In international trade, market efficiency refers to the extent to which prices in the global market reflect all available information, allowing resources to be allocated optimally across countries.

China has been known to require foreign companies to transfer technology to local firms as a condition for market access. This practice may distort market efficiency by forcing companies to share proprietary technology rather than compete on a level playing field.

Intellectual property theft and insufficient protection of intellectual property rights in China have also been major concerns for Western companies. The lack of robust intellectual property enforcement can lead to inefficiencies, as it discourages innovation and investment by foreign firms who fear their inventions and technologies may be copied without adequate legal recourse.

Western companies also face various market-access barriers in China, such as joint venture requirements, limits on foreign ownership and regulatory hurdles. These barriers can prevent the efficient allocation of resources and limit competition and innovation, resulting in a less efficient market overall.

Despite these concerns, Western firms continue to do business with China.

China’s adeptness in transcending cultural barriers, combined with Western firms’ continued engagement, pose a significant challenge for Western economies, notably the United States’. The challenge is heightened as the US maintains a focus on traditional efficiency approaches in forging trade relationships across diverse regions such as Africa, Latin America and the Middle East.

Since traditional market efficiency approaches might not always suffice, Western economies may need to reconsider their strategies.

Bedassa Tadesse is Professor of Economics, University of Minnesota Duluth

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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US Supreme Court immunity ruling opens a Pandora’s Box – Asia Times

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The US Supreme Court ruled on Monday (July 1) that former president Donald Trump is entitled to some level of immunity from criminal prosecution, a decision that may effectively delay the trial of the case against him on charges of plotting to subvert the 2020 election.

The ruling introduced the unprecedented principle that any US president can legally subvert US institutions. In turn, the verdict has changed the US as well as the terms of its competition with Russia and China.

Did the Supreme Court ruling open a Pandora’s box for the US and the wider world? Looking at it from Rome, it’s all very puzzling and can spin Machiavellian thoughts. A flurry of public criticisms ensued; here are just a few samples:

“The Supreme Court’s conservative supermajority fundamentally altered American democracy on Monday, awarding the President a sweeping and novel immunity when he weaponizes the power of his office for corrupt, violent, or treasonous purposes. This near-insurmountable shield against prosecution for crimes committed while in office upends the structure of the federal government, elevating the presidency to a king-like status high above the other branches.”[i]

“Today’s decision to grant former presidents criminal immunity reshapes the institution of the Presidency. It makes a mockery of the principle, foundational to our Constitution and system of Government, that no man is above the law. Relying on little more than its own misguided wisdom about the need for “bold and unhesitating action” by the President… the Court gives former President Trump all the immunity he asked for and more … The main takeaway of today’s decision is that all of a President’s official acts, defined without regard to motive or intent, are entitled to immunity that is “at least … presumptive,” and quite possibly “absolute.”[ii]

“The Constitution, after all, states that the president “shall be commander in chief of the Army and Navy of the United States.” So, if presidential authority is “conclusive and preclusive” when presidents exercise their constitutionally granted powers, the Court appears to have ruled that yes, Trump could order the military to assassinate one of his political opponents. And nothing can be done to him for it.”[iii]

Trump’s advisor and ideologue Steve Bannon had just declared:[iv]

“Project 2025 and others are working on it — to immediately focus on immigration, the forever wars and on the fiscal and the financial. And simultaneously the deconstruction of the administrative state and going after the complete, total destruction of the deep state. In the first 100 days — this is going to be different than ’16 — we will have 3,000 political appointees ready to go.”

On July 1, in a televised speech, US President Joe Biden took up the challenge and described the ruling as a “dangerous precedent.” Biden said the judgment undermined the “rule of law” and was “a terrible disservice” to Americans.

So what is to stop Biden from acting against Trump’s plans to subvert the US? Biden might justify his actions “to save the Republic” and go scot-free.

One could argue that, as the Democrats risk losing the vote, if Biden doesn’t act he could usher in a dictatorship; if he does, America won’t be the same again.

So, the ruling has already deeply changed America. If Biden doesn’t act, what guarantees are there that Trump, or any other future president, won’t do it either?

As former Chinese leader Mao might say, the US president is now “wu fa, wu tian“—bound by no law or higher authority.

Between 2015 and 2016, after a series of conversations with Angelo Codevilla, I concluded that Trump would win. In early 2020, when I saw that Trump was underestimating Covid-19, I believed he would lose. If, after the loss, he had conceded defeat, he could potentially be president again now.

Trump’s statement, essentially arguing, “If I don’t win, Biden rigged the elections,” destroys any sense of democracy and undermines the US’s most significant assets – its system and values.

The Supreme Court ruling has opened the gates to fears that America could be lost if Trump wins.

Trump’s followers argue there was vote rigging in 2020. But vote shenanigans have existed since voting began; in ancient Greece, some believed drawing lots was fairer than voting.

John Kennedy was elected amid suspected vote rigging but Richard Nixon conceded. George Bush Junior’s first election win was not clear, yet Al Gore conceded.

What is at stake is the system and the values it projects worldwide. Without it, American leaders would be like any other, and Russian President Vladimir Putin or Chinese President Xi Jinping might be considered better than Biden or Trump combined. Without that system, Putin or Xi could undermine America and turn the world upside down.

Did the Supreme Court fully consider the broad implications of its ruling? It grants a blank check to Biden, who, over the weekend, was reportedly considering withdrawing from the election due to his poor performance in the debate with Trump.

Yet now, until he steps down from office, Biden could do whatever he wants. This could last for an unspecified time – seven months if not re-elected, or four months, followed by four more years with re-election.

Then, if Trump’s January 6, 2020, actions are not considered insurrection, Biden’s future actions won’t be judged as such either.

In other words, Trump, to save himself from a relatively small danger, opened himself up to much larger jeopardy. What will happen to him if Biden decides to act on his new powers granted by the Supreme Court?

Why shouldn’t Biden prevent a publicly announced plan to subvert American institutions, as detailed by Bannon? It would be a dereliction of his duties not to.

Being old and frail, Biden might even be a better guarantee of democracy in the US, as he is unlikely to extend his hold on power after the next four years.

These are not mere hypothetical scenarios; they are realities. The Supreme Court has handed Biden an incredible and unprecedented instrument. He will be criticized regardless of what he chooses to do with it.

Thus, he may only choose the lesser evil. Then, perhaps it’ll start a path to restore US values and democracy.

[i] https://slate.com/news-and-politics/2024/07/supreme-court-john-roberts-opinion-trump-immunity-nightmare.htm

[ii] https://nymag.com/intelligencer/article/supreme-court-gives-trump-permission-to-stand-above-law.html

[iii] https://www.vox.com/scotus/358292/supreme-court-trump-immunity-dictatorship

[iv] https://www.nytimes.com/2024/07/01/opinion/steve-bannon-trump.html

This essay first appeared on Appian Institute and is republished with permission. Read the original here.

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Ukraine’s debt negotiations could decide the war – Asia Times

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As Ukraine fights against Russian invasion, it faces a battle on two fronts: military and financial. Global attention understandably focuses on battlefield developments, where Russian troops are pushing toward Ukraine’s second city, Kharkov. But Ukraine is simultaneously experiencing financial struggles.

With its economy damaged by war and the year’s defense cost estimated to be US$54.4 billion, Ukraine is on the brink of defaulting on $22.8 billion in debt. For Ukraine, debt is not an accounting exercise – it represents the ability to defend its sovereignty and secure its future.

At the onset of the war, private investors led by JP Morgan agreed to freeze Ukraine’s debt repayments. That agreement is set to expire in August. Both Ukraine and its lenders are racing to reach a last-minute debt deal to avoid default.

These debt restructuring talks are common between states and investors, but they usually last years and rarely occur in the context of war. At present, both sides remain far apart in their negotiations. Ukraine is demanding a 40% reduction in its debt obligations and investors are willing to take only a 20% loss – known in financial circles as a “haircut.”

Ukraine faces a trade-off in its debt negotiations. On the one hand, securing a larger debt reduction, or even an outright default, could free up substantial fiscal resources in the short term. This would allow Ukraine to redirect funds from debt payments to immediate war-related needs.

However, the long-term consequences of such a decision could be severe, with higher borrowing costs and longer periods of exclusion from capital markets. The outcome of these negotiations will shape not only Ukraine’s immediate defense capabilities but also its long-term economic resilience.

A country’s ability to access credit markets plays an important role in determining the outcome of a war. In previous research, which was published in 2013, I found that states with lower borrowing costs are significantly more likely to win their wars.

Debt allows states to mobilize more resources, more quickly than they otherwise could. The cheaper the debt and the easier it is to access, the more resources that country can mobilize for its war effort.

Because of the importance of debt for war, states involved in wars rarely default. The risk of losing access to credit markets is usually too high. There are, however, some notable exceptions.

Russia technically defaulted on its debt shortly after its invasion of Ukraine in 2022 because sanctions made it impossible to make debt payments. And Saddam Hussein’s Iraq defaulted amid the war between Iran and Iraq in the 1980s. But both countries had substantial natural resource wealth to draw upon, a luxury Ukraine doesn’t have.

The Russian and Iraq exceptions highlight another crucial factor in wartime finance: the nature of a country’s political system. As autocracies, Putin’s Russia and Saddam’s Iraq could impose restrictive economic measures during wartime.

The Russian government, for example, has imposed controls that make it difficult for exporters and foreign companies operating in the country to take money out of Russia.

By contrast, the Ukrainian government has to be sensitive to the domestic political pressures of war financing. Measures like those adopted in Russia would probably spark political discontent in Ukraine.

Debt allows democratic leaders to mobilize resources without relying on unpopular fiscal strategies. However, facing the prospect of reduced access to debt, Ukraine has reverted to divisive tax policies that have raised the tax burden on individuals while cutting social spending.

Taxes are important to the war effort but they risk upsetting the necessary domestic support to continue fighting. And the Ukrainian government has been accused by journalists and international watchdog groups of being too restrictive in its response to domestic discontent.

The Ukrainian domestic intelligence agency allegedly surveilled an investigative media team in their hotel rooms.

Ukraine’s financial future

There’s some good news for Ukraine’s leadership though. After much delay, US Congress passed a military aid package worth $60 billion in the spring. At the same time, the UK provided its largest aid package to Ukraine, worth more than $3.8 billion for 2024.

More recently, the G7 (which consists of Canada, France, Germany, Italy, Japan, the UK and US) agreed to use Russia’s frozen assets to finance a new $50 billion loan to Ukraine.

These additional financial resources are needed for Ukraine’s war effort. But they do not solve the immediate debt problems. The UK and US aid packages are earmarked for military equipment only and cannot be used for budgetary support. The G7 loan will be more flexible, but that money is not expected to be delivered until later this year.

Ukraine must balance the immediate needs of war financing with long-term economic considerations and domestic political pressures. The stakes could not be higher. The terms Ukraine secures in debt negotiations will affect not just its ability to fund the current war effort, but also its capacity to rebuild once the conflict ends.

Patrick E Shea is Senior Lecturer in International Relations and Global Governance, University of Glasgow

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Cryptos, gold and the end of the dollar – Asia Times

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The US federal debt, which is currently approaching US$ 35 trillion or 1200 % of GDP, is alarming a growing number of economics and financial analysts. Prior to defence spending and rights, interest payments on the debts have grown to be the most important item in the US federal budget.

In earlier June, previous US House Speaker Paul Ryan proposed that the US government may recognize stablecoins, resource- backed bitcoin, as settlement for US Treasuries. According to Ryan, the initiative would lead to an “immediate, tough increase in demand for US debts, which would lessen the chance of a missed debt auction and an ensuing financial and economic crisis.”

Ryan’s plan serves as a testament to how serious the US loan issue has grown. Cryptocurrencies were conceived as anti- stablecoins currencies. They are modern currencies that are privately issued and can be used anywhere in the world in an anonymous manner. Bitcoin, the first bitcoin, was meant to be a system for a new economic system that could start with a clean slate.

In the US, as of 2024, crypto advocates are calling for the regulation of asset-backed cryptos ( stablecoins ) so that they can be used to buy US Treasuries and pay taxes. Cryptocurrencies may be able to save the imperfect financial system that they were supposed to replace.

US Congressman Matt Gaetz introduced a bill that would allow Americans to give their federal income tax in Bitcoin two days after Ryan submitted his plan. Gaetz claimed that the dramatic change would encourage creativity, increase efficiency, and give Americans more freedom.

This is a courageous step in the direction of a future where digital currencies are essential to maintaining the US’s position as a leader in scientific development, according to Gaetz.

Is it possible for a fiat currency to survive with personally issued currencies? In the last 50 years, the dollar lost 90 % of its value, and it is still losing money annually at a rate of about 10 %.

Altcoins vary widely in price, but almost all of them are priced in dollars. They are therefore susceptible to a potential ( some economists say unavoidable ) devaluation of the dollar. &nbsp,

Bitcoin Pizza Day

A bit of bitcoin history. A computer programming using the pseudonym Satoshi Nakamoto published a report on a crypto bulletin board on October 31, 2008, to proclaim Bitcoin, the first peer-to-peer cryptocurrency. People may “mine” Bitcoins by completing complicated mathematical puzzles and receive rewards for the newly created coins.

Nakamura argued that the economic system was corrupt and benefited a tiny elite by using taxpayer money to bail out Wall Street in 2008. Bitcoin would be the person’s income, beyond the power of governments. It may make it possible to pay someone anywhere in the world almost completely for free.

Just 21 million Bitcoin could be mined, making fiat currencies defense to inflation brought on by overwhelming money stamping, a criterion found in fiat currencies.

Bitcoin is based on systems that existed, among them modern names.

In 2010, Bitcoin recorded its first commercial exchange. Who delivered two pies to his Florida residence in the form of a Bitcoin worker named Laszlo Hanyecz offered 10, 000 BTC to him?

American computer Jeremy Sturdivant accepted the offer. He had two pies delivered to Hanyecz’s house at a cost of$ 25, and Hanyecz transferred 10.000 bitcoin to Studivant’s Bitcoin budget. Bitcoin was valued at$ 0.0041 during the transaction.

Currency’s initial purchase, remembered as Bitcoin Pizza Day, generated broader involvement in the modern money. Entrepreneurs started crypto exchanges to facilitate the purchase and sale of cryptocurrencies, and they invested in server farms to stone cryptocurrencies. In a simple 15 times, Bitcoin’s cost went from almost zero in 2009 to a maximum of &nbsp,$ 75, 830 in early 2024.

Bitcoin’s potential as a pay method was unsuccessful. Just a small percentage of Bitcoin transactions are made for retail use. The remainder involves crypto investing.

Crypto companies have created a number of different kinds of altcoins. Among them are bitcoins. Some cryptocurrencies are backed by assets like real estate, corporate debts, and even other cryptocurrencies, people are backed by reserves of stablecoins assets held in bank transactions. A bitcoin named DigixDAO has a” stain backed by physical gold” that is supported by 1 ounce of silver that is stored in a bunker.

Ironic is the rise of cryptocurrencies that are gold-backed. The US government’s decision in 1971 to remove the money from the gold standard was largely responsible for the difficulties in the financial system, which allegedly contributed to the development of Bitcoin.

The consists

After WWII, the US dollars became the global reserve currency. The dollar was purged from gold at a fixed price of$ 35 per ounce under the Bretton Woods Agreement of 1944. &nbsp, The English lb, the French franc and assets of different countries were pegged to the money, and hence indirectly to silver. By limiting the amount of money that can be issued, metal resources impose fiscal discipline on nations.

In the 1960s, many European nations expressed concern that the US state was damaged financially, which was the outcome of a pricey war in Vietnam and the introduction of social plans ( the War on Poverty ). Economists in Europe speculated that the US was printing more money than gold had again.

The French state made its issues known in a serious manner. It demanded ore in exchange for sending a warship full of dollars to New York. Many other countries followed suit, albeit without ships, and they progressively drained US silver resources.

At the end of World War II, the US had 21 measurement tons of gold. In 1971, just 8.133 plenty remained. The US government announced that it would temporarily shut the so-called golden windows, defaulting on the Bretton Woods Agreement, in order to lose its remaining property.

In exchange for military protection, the US in 1974 persuaded Saudi Arabia to buy all of its oil in dollars to maintain the worldwide demand for the currency. The deal mandated that all oil-importing countries keep dollar reserves, leading to an ever-increasing demand for dollars.

The so-called petro-dollar strengthened the status of the US dollars as the world supply money. The oil trade represents only 7 % of the global economy, but it is essential to the other 93 % of the economy.

Exploding loan

The US government has quickly increased its bill, no more constrained by the restrictions imposed by the gold standard. In 1971, US debt was$ 400 billion, in 2024 it reached$ 34 trillion, or 120 % of GDP.

To fund its shortfalls, the US government issues attention- bearing Treasuries. Backed by” the full faith and credit” of the US state, Treasuries have been regarded as a risk- completely purchase. The major customers were private owners, international institutions, pension funds and insurance companies.

Silver has been replaced as the dollar system’s core by US debts.

But history is repeating itself. In the late 1960s, France was concerned about the US silver deposits. Currently, China is concerned about US Treasuries.

China developed a sizable trade surplus with the US, bringing in at one point$ 1 billion a day net as it became the factory of the world. China became the world’s largest borrower to the US with a portion of its dollar to buy US Treasuries, joining Japan and Japan as the only other country to do so.

Next came the renowned Wall Street loan and the global financial crisis of 2008. China came to the conclusion that the US lacked the desire to control its investing or overhaul its political or economic system. China eventually cut back on its US bill purchases throughout the 2010s. Also, it started to lay the foundation for an alternative economic structures.

De-dollarization

Om 2021, China, Hong Kong, Thailand and the UAE announced they were developing mBridge, a digital alternative to SWIFT ( Society for Worldwide Interbank Financial Telecommunication ). Importantly, mBridge is based on a variation of bitcoin, the technology used in most bitcoin.

The standard structures of mBridge, the BRICS solution to Smooth

mBridge is designed to work with Central Bank digital currencies and serves as the most good case study for a monetary settlement system for the BRICS nations. The Cooperation Council for the Arab States of the Gulf ( GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, has tested its own CBDC Bridge that will be connected to mBridge.

BRICS is also developing a trading forex system that could be backed in part by silver, oil, and other supplies. The biggest obstacle to the money has been a gold or oil-backed currency. Despite their strange appearance, golden and petrol have remained close to balance for more than a century. Their individual rates move within a very small area.

In 1971, when the US closed the golden window, an ounce of gold sold for$ 35. It reached$ 2, 450 in first 2024. In 1971, a barrel of oil was$ 3.60. In recent years it has traded between$ 80 and$ 100 a barrel. Measured in silver and oil, the money lost about 90 % of its value in the last 50 years.

If the BRICS introduces a coin that is pegged to gold, it might have an impact on the prices of everything from copper and gold to aluminum and the crucially important rare earths used in natural technology.

A developing BRICS will not only be the largest manufacturer of many industrial and consumer goods, but also have the ability to control a sizable portion of international assets. The latest BRICS people ‘ complete economic output has already surpassed that of the G7.

Saudi Arabia made the announcement to visit both BRICS and mBridge in June of this year. The Saudis had now begun selling non-dollar oil, but the statement made it clear that their commitment to the petro-dollar had come to an end.

The Saudi choice elicited a reaction from Michael Saylor, inc- founder of crypto big MicroStrategy. According to Taylor, the Saudis were making a error and should have chosen Bitcoin otherwise.

He wrote:” Picture a planet where 50, 000 businesses use cryptocurrency with P2P settlements with each other. Ask the Bank of Australia, the Bank of Austria, or the Bank of China if they would n’t like to have an asset that does n’t lose 7 to 10 % of its value annually. Ask them if they would n’t prefer to be able to make deals with any other banks in the world, peer- to- gaze. It’s an advancement over the existing system”.

Saylor perhaps knows better. Why do countries in the BRICS, including Saudi Arabia, China, and other BRICS nations, exchange their goods or commercial goods for dollars while deviating from the money system?

Crypto or metal?

Severe forms of economic engineering have made the US debt problem worse. Introducing bitcoin into the monetary system takes this a significant step further. Cryptocurrencies can be used secretly and across borders, making it ideal for duty evasion. It was, according to scholar Michael Hudson, change the US into” the new Switzerland”.

Hudson wrote:” The US sees acting as the place for the country’s tax evaders, criminals and others as a good regional strategy. The intention is not to criticize tax violence and more violent criminal acts, but to make money by serving as lender for these activities.

The US has three options, according to macroeconomist Luke Gromen, none of which are painless: it must reduce defence spending and privilege by at least 30 %, it is partially mistake, or it can fill the bill, barring a productivity miracle caused by AI or a breakthrough in cheap energy. Only in a national incident, which may lead to years of incredibly high inflation, are the first two options politically feasible.

Also, says Gromen, the US will have to re- flourish to reduce its reliance on foreign companies for even the most simple of items. The second US president will need to develop an commercial policy, or, better still, a national strategy to reimagine society.

In the short term, there is no reason for optimism. Donald Trump, a former US president, granted cryptocurrencies. He has pledged to chastise nations that stop using the money and that his reelection strategy accepts donations in bitcoin.

That does n’t sound like a plan. Reserve economies are on the verge of extinction. They are still present in the colonial period.

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Power imbalance beckons US, Japan to South China Sea – Asia Times

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The annual local security summit held by the International Institute for Strategic Studies in Singapore in the first few days of June, Shangri-La Dialogue, featured a number of significant events.

They included violent remarks from the newly elected Chinese protection minister, Admiral Dong Jun, obvious protests against civilian deaths in Gaza from both Malaysian and Indonesian presidents, as well as a surprise appearance by Ukrainian president Volodymyr Zelensky, who was there to rally support among South Asian and additional middle-income nations for his peace summit in Switzerland on June 15 and 16?

However, the Philippines ‘ President Ferdinand” Bongbong” Marcos won undoubtedly the most awards for his claim that a South China Sea conflict would almost certainly be regarded as a war action if a Filipino soldier was killed by a Chinese water weapon during a fight.

Given that an “act of war” would summon the 1951 common security agreement between the United States and the Philippines, the rules of which Austin himself reaffirmed when signing fresh Bilateral Defense Guidelines in May 2023, the American Secretary of Defense, was somewhat more cautious on this matter. But the concept had yet been sent, loud and clear.

President Marcos’s note, made in response to a query from a Financial Times columnist, sent both a joy and a shiver around the space. A South Asian leader’s strong resistance to Taiwanese bullying was a delight to many people.

The implications, however, were chilling because they showed that a conflict between the country’s two most powerful military forces may arise not just over the unavoidable issue of Taiwan, where preparations and negotiations offer hope for averting issue, but also over the numerous disputed reefs and submerged shoals of the South China Sea, where there is a high risk of errors and accidents at ocean.

The China Coast Guard is now able to apprehend any foreign regional who violates any formally established sea demarcations in the South China Sea, as a new Taiwanese order did on June 15. A Chinese ship collided with a Philippine send on June 17 and a Filipino seaman suffered serious injuries as a result of the decree.

This also raises the possibility that, in contrast to the hope that no Filipino service members will perish as a result of Chinese stress on their missions, China may choose to acquire fishermen, coastguards, or other personnel and carry them hostage in exchange, daring its opponents to intervene or forcing them to communicate.

It is a troubling promise. But there is no denying that there will still be unpleasant encounters at sea and severe words exchanged between the involved governments, perhaps for decades.

Since the middle of the 1990s, China and the Association of Southeast Asian Nations ( ASEAN ) have been discussing the need for a” code of conduct” for maritime operations in the South China Sea, but nothing has changed. This reflects two underlying challenges.

The first is that China views the entire South China Sea as a significant proper space that it wants to command, and possibly the East China Sea as well.

General Chiang Kai-shek’s desire to travel in the South China Sea on an “eleven-dash line” that he had created in 1947, was first expressed by the next Chinese head. The Chinese Socialists, who defeated him in 1949, subsequently adopted and modified that image.

The state is still in place despite the fact that there have been 10 dashes on China’s recognized 2023 map in the last 70 years.

This is in contrast to a 2016 case brought by the Philippines at the International Court of Arbitration in The Hague, which determined that the dashed range is in violation of the UNCLOS.

China may want to keep its options available and its opponents guessing, but it has never explicitly stated whether this claim is one of geographical sovereignty or simply corporate control. According to the order from June 15, it may now want to firm those concepts, at least in some South China Sea regions.

There is a significant power imbalance between China on the one hand and the Southeast Asian nations on the other, which has really emerged in the last 20 years or so with the huge Chinese military build-up.

While China then possesses the nation’s largest maritime force, nothing of Indonesia, Malaysia, the Philippines or Vietnam has been able to build up their own troops in reply, either because of economic failure or competing political interests.

Only the city-state of Singapore and tiny Brunei, two of the ASEAN nations that are located in or close to the South China Sea, spend more than 2 % of their GDP on defense. Singapore’s 2023 defense budget of US$ 13.4 billion was more than double the$ 6.1 billion spent by the Philippines.

Indonesia, the largest ASEAN country by population ( 275 million ) spent$ 8.8 billion, but that was a mere 0.62 % of GDP. China’s official defense budget in 2023 was$ 219 billion.

That enormous imbalance reflects both China’s remarkable record of economic growth and its great-power aspirations. Given that economic growth in Indonesia, Malaysia, the Philippines, and Vietnam is currently faster than that in China, there is a good chance that this imbalance will shrink over the coming decades.

If those four nations were to achieve an average of 7 % per year between now and 2050, and China’s average annual growth rate were to slow to 3 %, their combined economic heft would equal 45 % of China’s annual GDP by the middle of the century, compared to just 15 % today, or even more if exchange rates moved in Southeast Asia’s favor.

This expansion would discourage China from moving its militaries around in the South China Sea, thereby enabling the Philippines and others to build much stronger military forces. The issue is that redressing that enormous economic imbalance will require time, whereas the potential crises, conflict, and miscalculations are occurring right now.

The best long-term strategy is to aim for sustained economic growth while gaining from the diversification that many businesses are pursuing away from China. The best short-term strategy must still be to stay close to the two best non-ASEAN friends that the United States and Japan have in the South China Sea.

If and until that enormous power imbalance can be reduced, the role in the US and Japan region will only continue to grow.

Formerly editor- in- chief of The Economist, Bill Emmott is currently chairman of the&nbsp, Japan Society of the UK, the&nbsp, International Institute for Strategic Studies&nbsp, and the&nbsp, International Trade Institute. His new book,” Deterrence, Diplomacy and the Risk of Conflict Over Taiwan“, will be published by Routledge on July 15.

This is the original of an earlier version of Bill Emmott’s Global View, which was published in Bill Emmott’s article in English and Japanese on the Mainichi Shimbun in Japan. It is republished here with kind permission.

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