Yemen’s Houthis attack Israel with missile, drones

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The Israeli Arrow air defense system intercepted a heavy Houthi missile aimed at Israel’s Red Sea port city of Eilat. An Israeli expert has confirmed it was shot down by Arrow 2, not the exoatmospheric Arrow 3.

The Arrow intercept marks the first time that Israel has been attacked by Houthi forces in Yemen.  The Houthis are Iranian proxies and have used missiles and drones against Saudi Arabia. the UAE and Egypt.  

Arrow (missile family) - Wikipedia
Arrow-2 launch. Photo: Wikipedia

Today Yemen also claimed it sent drones to attack Israel. These were intercepted well outside of Israel’s territory by Israeli Air Force fighter jets and destroyed. Cruise missiles may also have been used in the Houthi operation.

While the Houthis have not said anything about the ballistic missile launch, they have acknowledged the drone attacks. “These drones belong to the state of Yemen,” Houthi leader Abdelaziz bin Habtour told the AFP news agency.

Israel has acknowledged that  it “coordinated with foreign armies” in defeating the Houthi attack.  These “foreign armies” most likely were either Saudi Arabian or Egyptian.

Earlier this week (October 29th)  two Houthi missiles landed in the Egyptian Red Sea resort town of Nuweiba.   Late last week, on October 27, the Houthis attacked the Egyptian Sinai town of Taba near the northern tip of the Gulf of Aqaba, a short distance from Eilat. 

All Houthi weapons come from Iran, and Iran provides both operational support and tactical direction.

Burkan-2H. Photo: al Arabiya

The Houthi intermediate range ballistic missile (IRBM) is the Burkan-2H (Volcano).  It is an Iranian version of the Russian Scud C or Scud D known in Iran as the Qiam 1 and/or Shahab 2. It is believed the missiles are shipped to Yemen in parts and the segments are then field-welded together. Its firing range is 1,200 km (746 miles). The missile features a 500 kg (1,102 lb.) warhead. 

A newer version of the Houthi IRBM can hit most targets in Saudi Arabia and an even further improved model, called the Burkan-3 (aka Ghader-H; see featured image at the top of the page) can go even farther, with a range of 2,000 km (1,243 miles).

The Arrow 2 apparently shot down the longest-range version of the Houthi-Iranian missiles.

The lineage of the missile traces back to the Soviet Union, but the modern versions probably originated in North Korea (Hwasong-5 and Hwasong-9) and were shared with Iran.

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Samad attack drone. Photo: FARS

The types of drones sent toward Israel by Yemen have not yet been specified. However it is likely that the type sent to attack Egypt and Israel was the Samad-3. It has a range of around 1,500 km (932 miles).  Experts believe the drones are supplied by Iran, although the Houthis claim they are home-built.

If a cruise missile was used, the Houthi type involved could have been the Quds-Z. This missile is identical to the cruise missiles Iran launched against Saudi oil installations at Abqaiq and Khurais in 2019.

Partial remains of an Iranian cruise missile that is identical to the Houthi Quds.

US policy toward Yemen and the Houthis is an ongoing problem.

The Biden administration lifted the terrorist designation of the Houthis put there by President Trump. The administration also pressured the Saudis and UAE to enter into negotiations with the Houthis and stop attacking them.

This has led to a build-up of Houthi offensive capabilities, which threaten Saudi Arabia, the UAE, Egypt and Israel.

The attacks on Egypt and Israel were totally unprovoked and aggressive and were done in furtherance of Iranian policy.

Stephen Bryen, who served as staff director of the Near East Subcommittee of the
US Senate Foreign Relations Committee and as a deputy undersecretary of defense
for policy, currently is a senior fellow at the Center for Security Policy and the Yorktown Institute.

This article was originally published on his Substack, Weapons and Strategy. Asia Times is republishing it with permission.

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South Africa must carefully manage ties with US, China

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South Africa must tread carefully in its economic relationships to avoid being caught in the escalating tension between East and West, and more specifically China and the US. The country’s hosting, and the outcome, of the 2023 AGOA Summit should strengthen its role in diplomatic relations and contribute toward safeguarding South Africa’s economic interests.

From November 2-4, the US and 35 sub-Saharan African countries will meet in Johannesburg for the 20th Africa Trade and Economic Cooperation Forum (AGOA Forum). It entails strengthening trade and investment ties between the US and sub-Saharan Africa through the Africa Growth and Opportunity Act (AGOA), US legislation that provides various trade preferences to eligible countries in the region.

Also read: Africa-focused US law reframed around countering China, Russia

Given Russia’s continuing war in Ukraine and its rising tension with the North Atlantic Treaty Organization, plus the China-US trade war, tensions between East and West are high. South Africa has come under attack for its non-alignment role in the Ukraine war. It refused to support UN resolutions condemning Russia. This resulted in some of the US Congress pushing for the forum to be moved out of South Africa.

The country recently hosted the 15th BRICS summit, which resolved to expand the Brazil, Russia, India, China and South Africa grouping to 11 member states. The enlargement will bolster BRICS’ role as a geopolitical alternative to the West, which is dominated by the US. Might this be a direct challenge to American hegemony?

I have been researching major global economic developments, such as globalization and the impact of the 2008 global financial crisis, for 20 years. This body of work shows the risks that come with behavior like South Africa’s. The country could find itself in the middle of a tense situation.

South Africa needs to pull off an exceptional balancing act in managing its international relations in a sensible way that protects and advances its economic interests.

Note that the geopolitical tensions between China and the US are not just about trade disputes. They also include espionage, China’s Belt and Road Initiative, climate change and environmental issues, and tensions over Hong Kong, Taiwan and South China Sea disputes.

As a major source of infrastructure financing to sub-Saharan Africa, China is now the region’s largest bilateral official lender. Its total sub-Saharan African external public debt – what these governments owe to China – rose from less than 2% before 2005 to more than 17% in 2021.

AGOA might present a challenge to China as competition for its own interests in Africa. China would like African countries to untie or loosen their agreements with the US. It is thus a good moment to take stock of the actual benefits South Africa has derived from the Agoa agreement with the US.

What AGOA is about

The AGOA agreement was approved as legislation by the US Congress in May 2000 for an initial 15 years. On June 29, 2015, it was extended and signed into law by then-president Barack Obama for a further 10 years, to 2025.

It will come into review again in 2024, hence the importance of the upcoming summit. Recently, Senator John Kennedy introduced a bill to the US Congress to extend AGOA by a further 20 years, to 2045. This is a bid to counter China’s growing influence in Africa, and to continue to allow sub-Saharan African countries preferential access to US markets.

AGOA’s benefits to South Africa

In 2021, the US was the second-most-significant destination for South Africa’s exports worldwide, mainly thanks to AGOA. China took the top spot; Germany was third. The US ranked third as a source of South Africa’s imports, following China and Germany.

In that year, the total trade volume between South Africa and the US reached its zenith at $24.5 billion, with a trade imbalance of $9.3 billion in South Africa’s favor.

AGOA offers preferential entry for about 20% of South Africa’s exports to the US, or 2% of South Africa’s global exports. The stock of South African investment in the US has more than doubled since 2011, amounting to $3.5 billion in 2020.

American foreign direct investment (FDI) in South Africa increased by more than 70% over that period, to $10 billion. This made the US South Africa’s fifth-largest source of FDI in 2019. The US was its third-largest destination for outward FDI.

US investment in South Africa is mainly concentrated in manufacturing, finance and insurance, and wholesale trade, which is vital for economic growth. American multinationals doing business in South Africa employ about 148,000 people.

More specifically, AGOA’s benefits include:

  • Duty-free and quota-free access to the US market for a wide range of South African products. This benefits South Africa’s textile and apparel industry in particular. To sub-Saharan African countries, Agoa provides duty-free access to the US market for more than 1,800 products. This is in addition to the more than 5,000 products that are eligible for duty-free access under the US Generalized System of Preferences program.
  • Export diversification, especially of items such as agricultural products, textiles, and manufactured goods. This is vital for increasing export earnings, which help to improve South Africa’s balance of payments, particularly its trade account.
  • Capacity-building through technical assistance and programs to help South African businesses meet US standards, thus becoming more competitive in the global marketplace.
  • Economic development and poverty reduction, which aligns with South Africa’s developmental goals.

Balancing economic interests

China is the largest consumer of South African commodity exports, and thus a key influencer of the rand exchange rate. In addition, China and Russia’s planned move toward de-dollarization (trying to replace the petrodollar system with their own system) puts American interests under threat. This means South Africa needs to navigate carefully its relations with the US and its BRICS partners, China and Russia.

It will want to keep strong ties with the US through AGOA without getting into a difficult position between China and the US. The outcome of this week’s meeting will have serious economic implications.

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

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Gaza war benefits Russia, but so would playing peacemaker

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The recent official visit to Moscow by representatives from Hamas and Iran was roundly condemned by Israel. A spokesperson for Israel’s foreign ministry called the visit an “obscene step that gives support to terrorism and legitimizes the atrocities of Hamas terrorists.”

The Hamas delegation was led by Mousa Abu Marzook, a founder and political leader of the militant group. Iran was represented by deputy foreign minister, Ali Bagheri, who was received by his Russian counterpart, Mikhail Galuzin.

Despite Russia’s involvement in a war in Ukraine that many still fear could engulf Europe, the Russian president, Vladimir Putin, has repeatedly warned that the conflict between Israel and Hamas in Gaza could escalate into a regional war.

His concern is shared by many in the West, given an uptick in activity by Iranian proxies in Syria and Iraq in recent months. This was given weight by US airstrikes overnight on October 26 against two facilities in eastern Syria that it identified as linked to Iran-backed militias.

Palestinian fighters from the armed wing of Hamas take part in a military parade to mark the anniversary of the 2014 war with Israel, near the border in the central Gaza Strip, July 19, 2023.
Photo: The Jerusalem Post / Twitter

A diplomatic solution to the crisis in Gaza remains a long way off, with the UN Security Council still riven with divisions. China and Russia vetoed a US-sponsored resolution while the US and UK vetoed a resolution sponsored by Russia.

The resolutions were similar in scope, calling for an immediate ceasefire. But the US resolution had language addressing states’ rights to self-defense while the Russian resolution called for a cancellation of the evacuation order for civilians to head into southern Gaza.

It appears that the Security Council is now so broken by Cold War-style divisions that it has effectively been rendered paralyzed, even if its members share the goal of avoiding bloodshed in Gaza that could trigger a regional war.

The General Assembly approved a non-binding resolution at the weekend, calling for a “humanitarian truce” in Gaza, but Israel and the US voted against. They were supported by 12 other countries, and 45 nations including the UK abstained, suggesting a lack of real consensus on the issue.

But the visit of Hamas and Iran to Moscow does suggest that Russia could play a peacemaker role in Gaza – even while Putin is the subject of an arrest warrant from the International Criminal Court for alleged war crimes committed as part of the ongoing conflict in Ukraine.

Russia has diplomatic relationships with all the parties involved, despite their mutual antagonisms, and has historically pursued active diplomacy in the Middle East.

Russia’s ties with Israel are also important. The two countries had a difficult relationship during the Cold War when the USSR supported many of Israel’s mortal enemies in the Middle East as a way of countering US influence. But there was a rapprochement in the 1990s.

Putin and Ariel Sharon, who was then Israeli prime minister, developed a close rapport. Sharon’s successors have continued this policy of staying close to Moscow.

After the Russian invasion of Ukraine in 2022, while the West lined up against Moscow, Israel offered to act as mediator and refused to send lethal weapons to Ukraine. Putin has reciprocated by acknowledging Israel’s right to self-defense, while calling for the two sides to seek a long-term two-state solution.

While making war in Europe, Putin is clearly trying to set himself up as a mediator in the Middle East. This is not as far-fetched as it might sound. Moscow has strong relationships with many of Israel’s antagonists: Iran, Syria, the Palestinian Authority, Hamas and Hezbollah, and major Arab powers, such as Egypt and the Arab League.

Before this most recent visit, Hamas officials had visited Moscow at least three times since the war in Ukraine. For them, Russia is only the actor that they trust to mediate, given its rapport with both sides of the conflict.

Moscow also maintains contacts with Palestinian Islamic Jihad, whose secretary general, Ziyad al-Nakhalah, visited Moscow in February 2021 and was formally received by Foreign Minister Sergei Lavrov.

On October 17, ten days into the crisis, Putin had telephone conversations with the leaders of Syria, Iran, Egypt, Palestine, as well as Israeli Prime Minister Benjamin Netanyahu.

Cordial: relations between Russia and Israel have grown warmer since Vladimir Putin took power in 2000. Photo: EPA-EFE via The Conversation / Shamil Zhumatov / Pool

What’s in it for Russia?

From the Kremlin’s point of view, the crisis in Gaza diverts attention – and aid dollars – from the war in Ukraine. Although US President Joe Biden urged Congress to approve another US$60 billion in military aid for Ukraine against $14 billion for Israel, it has been reported that ammunition destined for Ukraine has been diverted to Israel.

Many analysts believe that if it comes to prioritizing which country to support (a situation that hasn’t materialized – yet), Israel would win out.

Russia’s diplomatic stance makes sense. Both sides in the Israel-Palestine conflict are entitled to security, but neither should use excessive force. Importantly, Moscow has put the two-state solution – which appeared to have been shelved over recent years – firmly back on the agenda.

Russia’s foreign ministry spokesperson Maria Zakharova has called for the Middle East “quartet” of the UN, US, EU and Russia to be revived, to “move … in the direction of implementing and fulfilling all those resolutions of the [UN] Security Council and General Assembly that have been approved over all these years.”

Given all this, Russia could play a pivotal role in bringing peace to the Middle East. And arguably, the nature and severity of the crisis calls for the US to put its frustration with Putin aside for the sake of a greater good. The crisis is too big for geopolitical posturing.

If Russia can help to resolve it, it should be given a chance. If it scores some points in the war of narratives, it is a small price to pay for peace.

Anna Matveeva is Visiting Senior Research Fellow, King’s Russia Institute, King’s College London

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

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US-Philippine defense treaty is losing credibility

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Following its predecessors, the Biden administration threatened to go to war with China after a Chinese coast guard vessel scraped a Philippines ship on a resupply mission near a shoal in the South China Sea.

Shortly thereafter, a Chinese fighter flew within 10 feet of a US bomber above the disputed tract of reefs and islets.

While US-China relations appear to be emphasizing diplomacy, with Chinese Foreign Minister Wang Yi’s visit to Washington and US representation at China’s Xiangshan Forum, its premier defense conference, a possible conflict over sandbars is likely top of mind.

However, the US pledge to go to war with a nuclear-armed China over largely uninhabited rocks and reefs – stemming from post-colonial disputes – is not credible, harms US interests and creates unnecessary regional tensions.

The United States going to war with China to defend the Philippines’ claims to rocks and reefs in the South China Sea is not credible. These islets are largely uninhabited – save for a grounded ship Manilla uses to press its claims – and strategically irrelevant.

The Sierra Madre, the grounded ship used by the Phillippines as a guard station on the Second Thomas Shoal. Photo: US Naval Institute

Although trillions of dollars in global trade traverse these waters annually, an overwhelming majority goes to China. Additionally, ships are moving objects, they can change their course. Though more expensive, merchant ships can often go around the South China Sea to reach destinations in Southeast and Northeast Asia, as well as the United States.

Strategically, controlling the small bits of territory makes little difference. While they can serve as military outposts and bases, these locations are highly vulnerable to missile bombardments. Resupplying these military installations would be difficult, as supply vessels would have to worry about missile and submarine attacks.

Their size also makes them poor staging grounds for wider invasions. If China were to invade the Philippines, it would unlikely be able to muster enough troops on the rocks for a successful landing.

More importantly, the risks to US survival are too high and opportunity for tangible gains too little for Washington to be serious about its threat to defend disputed rocks and reefs.

America is highly unlikely to risk nuclear war or an equally deadly conventional war over a single Filipino ship or plane – let alone a small group.

The United States did not declare war on North Korea when it sank a South Korean ship and bombarded an island, nor did Washington mobilize when a Chinese boat – likely linked to China’s government – collided with two Japanese coast guard vessels in 2010.

Such moves would set negative precedents for US allies, signaling that Washington is willing to back their territorial claims – even potentially irredentist and imperialist ones – and disproportionality at the expense of US interests.

Just like the Philippines, China cares far more about its South China Sea claims than the United States for nationalist and territorial integrity reasons. The islets are also an essential pillar of China’s Century of Humiliation narrative and factor into the Chinese Communist Party’s legitimacy.

As such, the disputed territory is part of Beijing’s “core interests” – national interests in which China will use force to defend. Moreover, China’s geographic proximity – despite the US military presence in the Philippines – gives it the edge.

Instead of focusing on defending rocks and reefs in the Western Pacific, Washington should reorient its alliance with Manilla to be purely defensive and aimed at protecting the Philippines’ home islands. The new policy could enhance military training, defensive planning and coordination, and defensive arms sales centered on the Filipino homeland.

At the same time, Washington should publicly and privately signal that America would only come to the Philippines’ aid if one of its main islands is attacked unprovoked. This would likely restrain the Philippines from risking activities that could embroil it in a conflict with China and, therefore, reduce regional tensions.

Further underscoring the purely defensive nature of the alliance, Washington should also rule out using its bases in the Philippines as a staging ground to defend Taiwan. Manilla would not only agree with this, but it would be in the Philippines’ interest. It could help protect them from becoming collateral damage from a Chinese invasion of Taiwan.

The Philippine Coast Guard vessel BRP Cabra encounters two Chinese Coast Guard ships blocking its path on August 22, 2023, while sailing to the Second Thomas Shoal in the disputed South China Sea. Photo: Twitter Screengrab / Jakarta Post

This would also help reduce tensions in the South China Sea – as closer US-Philippines defense ties are likely contributing to increased Chinese assertiveness. Southeast Asian nations would also appreciate reduced regional tensions to focus on improving their people’s livelihoods, which would also improve America’s standing in the economically important region.

Washington’s commitment to go to war over some rocks and reefs in the South China Sea lacks credibility. The area is simply not economically or strategically important enough to risk US survival.

Transforming the Philippines alliance into a purely defensive one would better secure American interests, improve its credibility, and reduce regional tensions. America should act now before it’s too late. 

Quinn Marschik is a contributing fellow at Defense Priorities.

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A tiger economy starts to roar in Vietnam

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Amid the Covid-19 pandemic and rising US-China trade tensions, Vietnam leapfrogged South Korea to become the United States’ sixth-largest trade partner by import value in 2022. 

This jump represents an important pivot in Vietnam’s economy — Vietnam’s biggest export to the United States is no longer textiles and garments, but high-tech products.

By the end of 2023, many flagship Apple products will have been assembled in Vietnam. Rather than competing against China’s “world factory” tag, Vietnam has branded itself as an additional manufacturing destination to China within the global supply chain ecosystem. 

In so doing, Vietnam has subsumed some of China’s tech export market share and has been declared the biggest beneficiary of the US-China economic decoupling.

Vietnam has provided a much-needed “neutral” environment for foreign fintech firms to de-risk and reroute their exposure from the US-China great power rivalry — including Apple’s shift of production away from China, US-based Amkor Technology’s investment of $1.6 billion investment in a semi-conductor factory. Vietnam is also welcoming back Huawei after initially deferring to US efforts to ban the company.

Vietnam has the potential to become the fourth-largest exporter of high-tech goods behind China, Taiwan and Germany. Though Vietnam currently holds the seventh position, its growth has no rival — high-tech goods as a share of Vietnamese exports hit 42% in 2020, up from 13% in 2010.

By some accounts, Vietnam is “shadowing” China in its efforts to become an upper-middle income economy. But unlike China, Vietnam’s state capitalism is seen as non-threatening to Western and Asian economies. Through its “independent” foreign policy, Vietnam is able to hedge and thrive in today’s geopolitical environment.

Vietnam is an autocratic regime with a very poor human rights record whose state-owned enterprises significantly crowd out private-sector innovation. 

A policeman blocks photographers from taking pictures during an anti-China protest in front of the Opera House in Hanoi in a file photo. Photo: Reuters/Nguyen Lan Thang
Vietnamese activists stage a rare anti-China protest in Vietnam in a file photo. Photo: Facebook

At the same time, others have recognized that the Vietnamese government’s intervention in opening the country up for free trade and foreign direct investment can be seen as overwhelmingly positive and non-threatening to the global trading system.

Vietnam’s model of state capitalism is indeed compatible with market-driven economic growth. In a seminal work on the variations of state capitalism, three dimensions of state capitalism were identified. 

The first is whether government intervention is threatening or non-threatening, the second is the degree of state ownership and the last is statism, or the level of coordination between state actors and non-state actors in sectors such as education and healthcare. Countries can exhibit high ratings on one factor and low ratings on another.

While the Vietnamese government is strongly embedded in all sectors of society, statism in Vietnam often tolerates and responds positively to citizens’ criticism — particularly in areas relating to public corruption, climate change, education and public health.

But Vietnam’s meteoric rise in high-tech exports has yet to speed up its entry into the exclusive club of “Asian tiger” economies. In previous decades, South Korea, Taiwan and China have entered the club by climbing from low-tech manufacturing to advanced high-tech production. 

It might take about 15 years for Vietnam’s GDP per capita — which was US$4,320 in 2023 — to reach China’s 2023 GDP per capita of $12,540.

While Apple is tasking its suppliers to invest, produce and assemble products in Vietnam, the question is whether Vietnam can capture value-added opportunities and see Vietnamese firms gradually becoming Apple suppliers. This seems unlikely in the short term, as all of Apple’s suppliers are Chinese or Taiwanese foreign-invested firms that have relocated to Vietnam.

While Vietnam’s high-tech exports are fuelling the country’s growth, there is an overreliance on foreign innovation inputs, with about 70% of Vietnam’s total export value driven and captured by foreign companies. 

Vietnam’s GDP per capita growth potential is significantly lower than that of other Asian tigers after reaching lower middle-income status. This is because Vietnam’s total factor productivity (TFP) and human capital have yet to be driven by domestic inputs, and technology spillovers aren’t occurring fast enough.

But there is a significant bright spot: Current FDI inflows from fintech companies are giving Vietnam more time to address its dependency on foreign innovation inputs. 

For instance, the Vietnamese government could entice Apple to invest in research and development and deepen its relationships with Vietnamese universities and students, as Apple did in China.

Vietnam is fertile ground for Apple R&D. Image: Twitter

Vietnam has uniquely positioned itself to be among the fastest-growing economies in the coming decade. And its success in managing Covid-19 as Asia’s top-performing economy during the pandemic has strengthened the country’s statism and reputation as a safe and friendly environment for foreign direct investment.

Vietnam’s race to become the next Asian tiger has its challenges, including the question of how to reduce the country’s overreliance on foreign innovation inputs. But it appears that core elements of an innovation ecosystem are taking root as Vietnam establishes itself as a high-tech export power.

Amid deglobalization and a global pandemic, Vietnam has emerged as an outlier, showing that its state capitalism is a capable growth model. Vietnam has secured more time – if not an inside track – in the race to become the next Asian tiger.

Long Le is Director of the International Business Program the Leavey School of Business at Santa Clara University. He is also an affiliated Senior Research Associate for the University of Oregon’s US-Vietnam Research Center. The opinions expressed are his own.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Huawei surges into the 5.5G lead

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Huawei is moving ahead into the 5.5G era, a marked advance over current 5G networks and a practical halfway house on the road to 6G. Also known as 5G-Advanced, 5.5G promises big improvements in factory automation, autonomous driving and various other applications.

At the company’s 14th Global Mobile Broadband Forum held on October 10-11 in Dubai, Huawei’s President of Wireless Solution Cao Ming announced “the industry’s first full-series solutions for 5.5G,” which he said “will help operators deliver full-scenario tenfold capabilities and enable ultra-high energy efficiency, spectrum utilization, and O&M [operations & maintenance] efficiency.”

Huawei has been working on 5.5G with network operators China Mobile, China Telecom, China Unicom, Saudi Telecommunications Company and the UAE’s du. At the forum, Huawei and du showed participants their 5G-Advanced demonstration smart home.

Technology market research organization Counterpoint explains that “Compared to conventional 5G, 5.5G represents a tenfold improvement in performance across the board. This means that 5.5G networks will be able to provide ubiquitous 10 Gbps downlink and 1 Gbps uplink speeds while supporting 100 billion IoT connections – compared to just 10 billion with 5G.

“In addition, 5.5G is expected to deliver latency and positioning accuracy that are a fraction of the current 5G standard as well as significant reductions in overall network power consumption.”

Huawei’s main network competitors, Nokia and Ericsson, are also working on 5.5G. Ericsson says, “Get ready for more sustainable and intelligent mobile networks and enhanced support for services and applications such as the metaverse, industry wireless sensors, and accurate positioning virtual reality.”

According to Nokia, “5G-Advanced is set to evolve 5G to its fullest, richest capabilities. It will create a foundation for more demanding applications and a wider range of use cases… with a truly immersive user experience based on extended reality (XR) features.” It will also be backward compatible, Nokia says.

By facilitating the use of artificial intelligence (AI) and machine learning across networks, Nokia expects 5G-Advanced to enhance the performance of industrial automation and autonomous robots, logistics, autonomous vehicles and drones, and power grid control.

It will also support massive low-cost IoT (Internet of Things) networks and public services such as railway systems and smart city management.

Huawei first proposed 5.5G/5G-Advanced at its 11th Global Mobile Broadband Forum in 2020. It was designated as the second phase of 5G by 3GPP (the 3rd Generation Partnership Project), an international association of seven telecommunications standard development organizations, in 2021.

In July 2022, Huawei executive director David Wang introduced the company’s 5G-Advanced innovation roadmap, noting that “AI will be fully integrated into enterprise production processes, and the size of the 5.5G IoT market will grow rapidly.

“Collaboration between robots and people in complex scenarios will impose greater requirements on next-generation industrial field networks.”

At the Mobile World Congress held in Barcelona, Spain, from February 27 to March 2, 2023. Huawei stated that “5.5G will expand on 5G, but will be faster, more automated and more intelligent than 5G, and support more frequency bands.

“5.5G will deliver 10 times greater network capabilities, which will translate into 100 times more opportunities. Free-viewpoint video, enterprise cloudification, mobile private networks, passive IoT, and integrated sensing and communication will all develop rapidly thanks to these advances in 5G.”

Four months later, during the Mobile World Congress Shanghai at the end of June 2023, Huawei announced plans to launch a complete set of commercial 5.5G network equipment in 2024.

Despite being progressively excluded from the US and its allies in Europe and Asia, Huawei is securely positioned as the leading telecom equipment provider in China, which is both the world’s largest industrial economy and well ahead in 5G deployment.

By the end of September 2023, China had built 3.2 million 5G base stations and had nearly 740 million 5G users accounting for half the world total, according to the Ministry of Industry and Information Technology (MIIT).

More than 20,000 5G-enabled industry virtual private networks had been established by the end of last month. China’s 14th Five-Year Plan calls for more than 10,000 5G-enabled factories to be built by the end of 2025.

Nokia and Ericsson will not be allowed to compete for much of China’s market. With time, they can be expected to regain their former dominance in Europe as the EU and UK apply “rip and replace” policies to Chinese telecom equipment, but European economies and investment are currently weak.

Ericsson has its own 5G smart factory in the US, but the country is lagging behind Europe in industrial 5G deployment. The Center for Strategic and International Studies (CSIS) in Washington, DC, notes:

“The United States faces a large and growing gap with China in radio frequency spectrum allocated for 5G wireless communications, particularly mid-band spectrum bands licensed for wide-area coverage, which constitute the primary arteries of the 5G economy and the broader global ecosystem of wireless connectivity.

“The United States needs to move urgently to allocate more mid-band spectrum for licensed commercial 5G use. If it does not do so, the US spectrum shortage will hinder technological innovation and give China an open path to global leadership in the connected future of the twenty-first century, threatening the economic and national security of the United States.”

Optimists in the US say that sanctions on China’s semiconductor industry will stymie the advance of Chinese telecommunications technology, but there is no evidence this is happening so far.

According to the MIIT, China has already established a nearly complete supply chain for 5G networks, has more than 40% of the world’s 5G-related patents and has completed all 5.5G/5G-Advanced technical performance tests. Huawei itself has already built its first 5G-Advanced industrial production line.

As reported by China’s Communist Party-run Global Times, MIIT will continue to accelerate 5G applications in fields such as manufacturing, mining, electric power and port management, and explore new applications in healthcare, education and other sectors. 5G has been extended to 67 of the 97 major Chinese economic categories, MIIT says.

With time, these applications will be upgraded to 5.5G, which Huawei will also deliver to the Middle East and other places resistant to US pressure.

Follow this writer on Twitter: @ScottFo83517667

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Japan reminds world why it’s stuck in QE quicksand

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TOKYO – The Bank of Japan bowed to financial realpolitik Tuesday (October 31) by allowing bond yields to top 1%. But Governor Kazuo Ueda remains tethered to a level of policy unreality sure to keep the yen under strong downward pressure.

Ueda’s step was the tiniest the BOJ could have gotten away with without shoulder-checking global markets. It means far less than currency traders may think in terms of when and how Japan might exit a 23-year-old quantitative easing (QE) experiment.

The BOJ meeting “ended up somewhat confusingly but largely dovish leaving the yen still vulnerable to a further sell-off versus the dollar,” says Gary Dugan, chief investment officer at Dalma Capital.

In fact, the events of the last month might have ensured that Ueda’s team remains stuck in the QE quicksand longer than markets appreciate.

Since taking the helm in April, Ueda has been testing markets’ readiness for BOJ “tapering.” It hasn’t gone well so far. A move in late July, for example, to let 10-year bond yields rise from 0.5% to 1% sent the yen higher than Tokyo expected.

In the weeks that followed, the BOJ executed countless large and unscheduled bond purchases. That signaled to traders that the July tweak was inevitable given the surge in US yields to 17-year highs and that overall BOJ rate policies hadn’t changed. It was similar to the one-step-forward-two-steps-back maneuver the BOJ pulled off in December.

Tuesday’s tweak is more of the same. As US rates continue drifting upward, causing extreme tensions between dollar and yen rates, the BOJ has no choice but to adjust. After all, it remains to be seen how many more US tightening moves are in store for global markets. News that US gross domestic product (GDP) rose at a 4.9% annualized pace in the third quarter upped the odds the Federal Reserve will keep hiking rates.

Yet Ueda’s challenge grew markedly bigger this month for other reasons, too. One is the sudden explosion of violence in the Middle East. The Hamas-Israel war threatens to accelerate increases in oil prices, adding to inflation risks caused by Russia’s 2022 Ukraine invasion. Japanese inflation is running the hottest in three decades at close to 3% year on year.

Significantly, the BOJ raised its inflation forecast to 2.8% from 2.5% for fiscal 2023. For 2024, price expectations have been raised to 2.8% as well.

But even as commodity price surges warrant tighter policies, China’s economic downshift is pulling BOJ priorities in the other direction. In October, mainland factory activity slid back into contraction, while the services sector slowed more than expected.

The manufacturing purchasing managers index dropped to 49.5 from 50.2 in September. Non-manufacturing activity fell to 50.6 from 51.7.

“China’s economic activity fell to an extent, and the foundation for a continued recovery still needs to be further solidified,” says Zhao Qinghe, senior statistician at China’s National Bureau of Statistics. Economist Raymond Yeung at Australia & New Zealand Bank adds this “downside surprise” means Beijing “will still need to deliver growth-supportive policy.” 

As Japan’s top trading partner stumbles, exporters are bracing for a rough 2024. That’s dimming hopes that Japan Inc might boost wages, kicking off a virtuous cycle of income and consumption gains.

As headwinds mount, Prime Minister Fumio Kishida’s government is rushing to roll out fresh stimulus. They include proposals for tax cuts for the middle class, reduced corporate levies and cash handouts to households facing higher inflation.

Japanese Prime Minister Fumio Kishida’s ‘new capitalism’ looks a lot like the old. Photo: Government of Japan

The large and growing price tag for fiscal initiatives could increase pressure on the BOJ to add more, not less, liquidity. Otherwise, government bond yields might surge, adding to financial pressures on banks and households.

Yet Kishida’s latest proposals complicate Ueda’s options in another way. By shoveling fiscal money to fill economic holes, the ruling Liberal Democratic Party is treating the symptoms of Japan’s troubles, not the underlying ailments.

As inflation spikes higher, Kishida’s approval ratings are plummeting, currently around 29%, to the lowest of his two years in power. Hence the rush to ramp up fiscal stimulus efforts.

Missing, though, are proposals to raise Japan’s political game. When he took power in October 2021, Kishida pledged to implement a “new capitalism” plan to spread more equitably the benefits of economic growth.

Part of the strategy was addressing the unfinished business from the “Abenomics” era, reference to Shinzo Abe’s 2012-2020 premiership, the longest in Japan’s history.

Abe promised a supply-side revolution the likes of which modern Japan had never seen. It included moves to loosen labor markets, reduce bureaucracy, boost innovation and productivity, empower women and restore Tokyo’s place as Asia’s premier financial center for multinational companies and stock listings.

Mostly, Abe leaned on the BOJ to supersize QE. In March 2013, he hired Haruhiko Kuroda as governor to turbocharge an experiment that the BOJ pioneered in 2000 and 2001.

Within five years, Kuroda’s binging on bonds and stocks pushed the BOJ’s balance sheet above $4.9 trillion, topping Japan’s annual GDP. A resulting plunge in the yen boosted exports, juicing the stock market and generating record corporate profits.

Yet Abe’s team put very few reform wins on the scoreboard. Other than steps to strengthen corporate governance, the Abe era failed at nearly every turn to recalibrate growth engines, level playing fields and give chieftains confidence to fatten paychecks.

One big concern is that Tokyo’s same-old-same-old policy approach has lost potency over time. Economist Sayuri Shirai at Keio University notes that, this time a falling yen isn’t altering Japan’s export and trade deficit dynamics like in the past. Industrial production and corporate investment also “remain sluggish,” says Shirai, a former BOJ policy board member.

“While the government’s revenue is increasing due to inflation-induced income and consumption taxes, this is essentially a tax hike,” she explains. “Wage growth has not caught up with the rate of inflation. Given rising government and corporate debt, a rapid interest rate hike is likely to cause significant stress to the economy.”

But weak exchange rates leave Japan uniquely vulnerable to surging energy and food prices. This dynamic is colliding with a domestic economy that might not be ready for a shift away from ultraloose monetary policy. One big worry: the risk of a Silicon Valley Bank-like blowup amongst Japan’s 100-plus regional lenders.

Worries about another SVB abound in the US, too. As Fed Chairman Jerome Powell’s team mulls another rate hike — perhaps as soon as November 1 – investors are scouring the financial landscape for the next bank that might buckle under the pressure of rising US yields.

A relentlessly strong dollar is also raising default risks in Asia, particularly in China. It’s making offshore debt harder to manage.

“The greenback continues to draw smaller benefits from strong US data and high rate advantage than it should, likely due to its overbought status, but upside risks remain predominant,” says Francesco Pesole, an analyst at ING Bank.

Analyst Adam Button at ForexLive says the constant threat that Japan’s Ministry of Finance might intervene to support the yen is capping the dollar’s gains – at least for now. But the dollar, Button notes, “should be stronger than it is this week, and I think it’s just a matter of time until it materializes.”

In general, though, traders need to figure out where both US and Japanese rates are heading to know where risks lie. “Additional positioning doesn’t really make sense until those two key risk events are out of the way,” says Bipan Rai, currency strategy at CIBC Capital Markets.

The fragility of Japan’s sprawling regional bank network remains a clear and present danger to Asia’s second-biggest economy. Many of these lenders service rapidly aging communities in already sparsely populated areas of the country. That squeezed profits well before the banking shocks of the last 15 years, including fallout from the 2008 “Lehman shock.”

That crisis, fast-aging customer bases and an accelerating exodus of companies to Tokyo had regional banks these last 15 years hoarding government and corporate bonds instead of lending the credit the BOJ has been churning out. It was a similar practice that blew up SVB and New York-based Signature Bank.

Earlier this month, Japan’s Financial Services Agency telegraphed efforts to stress-test at least 20 banks to surface any SVB-like landmines across the nation. Part of the worry is the specter of similar social-media-fueled bank runs.

No developed economy prizes stability and financial market decorum more than Japan. And few, if any, face greater concerns about hidden cracks than Japan with scores of fragile regional banks in harm’s way.

Photo. Reuters / Yuya Shino
The Bank of Japan has some tough decisions to make. Image: Asia Times Files / Reuters

At the start of 2023, SMBC Nikko Securities estimated that regional leaders were sitting on about $10.5 billion of unrealized losses on foreign bonds and other securities. That has Ueda’s team wondering how big losses might become if government bond yields rose to 2% or even higher.

The comparisons between midsize banks in the US and Japan are limited, of course. SMBC Nikko analyst Masahiko Sato argues that the average threat to capital ratios is only about 2%. Therefore, Sato does “not think potential losses are on a scale with systemic implications.”

At the same time, many of Japan’s regional lenders, like SVB, tend to prioritize bonds that can be sold rather than holding debt to maturity. But BOJ tapering or even a rate hike or two could change this calculus, and fast.

If regional banks face profit pressures with rates at zero, the fallout from a big rate pivot by Ueda could be extreme. This could explain in part why “markets are seemingly underpricing the risks of an early normalization,” says Charu Chanana, a senior market strategist at Saxo Capital Markets.

Stefan Angrick, senior economist at Moody’s Analytics, says “this doesn’t rule out the BOJ dropping negative rates at some point — we speculate this may happen in April 2024, after the spring wage negotiations that year.”

But, he concluded, “it suggests that the way forward is towards zero interest rate policy with some form of quantitative easing, rather than a sharp lift-off on the short end.”

Follow William Pesek on X at @WilliamPesek

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Why we’re seeing shifting patterns in global manufacturing

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The 10th anniversary of the Belt and Road Initiative (BRI) in Beijing on October 18 witnessed the usual smiles and handshakes. But China’s economic landscape, dependent on robust supply-chain networks, is facing turbulent times.

The US-led trade war had already disrupted Chinese industry and supply chains before the Covid-19 pandemic further backlogged ports and exacerbated disruptions. President Joe Biden’s administration has meanwhile continued to expand policies restricting China’s access to the US market and technologies, including new restrictions on advanced chip exports announced just one day before the BRI summit.

Foreign direct investment into China also plummeted by 43% in 2022, while the United States has persuaded allies to curtail their economic collaborations with China. For instance, Italy, which joined China’s BRI in 2019, announced its withdrawal from the project this April.

Meanwhile, the Netherlands began imposing restrictions on semiconductor exports to China in March. The 2018 arrest of two Canadian businessmen, widely perceived as retaliation for Canada’s detention of Huawei chief financial officer Meng Wanzhou at Washington’s request, has made foreign executives increasingly hesitant to travel to China.

The greatest concern for Beijing, however, is the threat to China’s manufacturing and export-led economic model, which has driven China’s growth for most of the 21st century. In the first half of 2023, China’s share of US goods imports stood at 13.3%, a decline from 21.6% in 2017, marking the lowest figure since 2003.

Some of this decline can be attributed to “re-shoring” policies, which are encouraging American companies to build factories in the US, with European companies also promoting local manufacturing.

Economic decoupling initiatives have also prompted Western companies to establish manufacturing infrastructure in friendly or nearby countries, often referred to as near-shoring or friend-shoring.

Countries such as Vietnam, Malaysia, Taiwan, Indonesia, India, Mexico and others are vying for Western companies’ attention, offering subsidies, tax breaks, and other incentives. The newest iPhone was assembled in India, for example, while more than half of Nike’s shoes are now made in Vietnam.

Mexico steps up

However, it is Mexico that appears poised to reap the most benefits from this “lifetime opportunity,” according to Bank of America. Its proximity to the US and the USMCA free-trade agreement with the US and Canada has driven American companies to ramp up production in Mexico.

Combined with the growing automation of the US manufacturing sector, these developments have sparked debate about whether China’s “peak manufacturing” has already passed.

Nonetheless, as the “world’s factory,” China’s dominance in manufacturing remains stable enough to support its economy. Its share of global manufacturing actually grew from 26% in 2017 to 31∞ in 2021 (aided by the global decline in manufacturing in the years leading up to and during the Covid-19 pandemic), whereas India, Mexico and Vietnam contributed only 3%, 1.5% and 0.6% respectively.

China’s share of global manufactured exports by value also grew from 17 % to 21% in the same period, and despite some declines in bilateral trade, US-China trade hit a record high in 2022.

China’s resilience to global supply-chain shifts can be attributed to strategic infrastructure investments that have streamlined its manufacturing and export operations. Efficient ports, extensive highways, reliable rail systems, well-established industrial parks, stable governance, a large working-age population, and other factors set China apart from potential competitors.

Although the value of manufacturing in the US has risen and 800,000 manufacturing jobs have been created over the last two years, for example, this has not kept up with job growth in other industries, and manufacturing’s share of US GDP has continued to decline. There are also fears that the US will have a shortage of 2.1 million skilled manufacturing workers by 2030.

India faces challenges related to competition from cheaper imports, high input costs, taxes, and regulatory hurdles, while Mexico contends with corruption and instability from cartels and Vietnam grapples with power outages and bureaucratic red tape.

Resistance to change

Instead, many of China’s manufacturing competitors have opted to collaborate with China, reinforcing traditional supply-chain dependencies that Washington is striving to break. This is exemplified most clearly in Mexico, where the advantageous conditions for US companies have also made it an attractive destination for Chinese companies seeking a nearby gateway to the US market.

Remarkably, 80% of the land leased to foreign companies in Mexican industrial parks is now in the hands of Chinese enterprises (compared with 15% for US companies), allowing Chinese goods to be delivered for final assembly before being exported to the US.

This phenomenon extends beyond Mexico. At the end of 2022, the US Department of Commerce discovered that major solar suppliers in Southeast Asia were barely altering Chinese products before they were sent to the US. Across the region, Chinese green tech companies are making significant inroads into the manufacturing infrastructure.

Even Vietnam, despite its ongoing and historical tensions with China, has cautiously embraced Chinese companies looking to drastically expand their presence in the country.

After spending billions of dollars building economic relations with their Chinese counterparts, US companies have also resisted cutting ties with their Chinese partners. A 2021 Federal Reserve research note suggested that many are underreporting their imports from China to evade tariffs imposed by Washington.

Others are encouraging their Chinese partners to establish factories in North America. Additionally, the cancellation of programs (or those slated to expire in the next few years) allowing goods from many developing nations to enter the US duty-free may leave room for China to step in as a preferred source for US distributors.

Despite the limitations of Western decoupling policies, it’s worth noting that China is also working toward a form of decoupling to reduce its dependence on the West. Announced in 2015, the Made in China (MIC25) initiative seeks to eliminate Chinese companies’ reliance on foreign nations for critical technologies and products.

Policies also continue to be introduced to expand China’s domestic market to compensate for restrictions on overseas markets.

Adjustments to Chinese policy

China’s economy will continue to be characterized by strengths and weaknesses. The rising wages of Chinese workers have steadily eroded the international competitiveness of the country’s shrinking labor pool, while an ongoing property crisis has shaken faith in China’s domestic economy. Moreover, Beijing has become less liberal with capital, opting instead to recover outstanding loans from the BRI.

However, Chinese officials and businesses are increasingly lobbying local governments with “small but beautiful projects” that negate the need for consultation with more suspicious national leaders. China also remains crucial in areas such as rare-earth minerals and is expanding its role in manufacturing higher-end products, from aviation to green tech, to compete with high-tech Western firms.

Chinese endeavors in Latin America and Southeast Asia to adopt Chinese supply chains also position it to sell to these markets.

Although it may seem that we have “already hit or passed the peak share of China in world manufacturing,” no other country has or is projected to rival China’s manufacturing power and export networks. Furthermore, neither China nor the West is able or willing to sever their economic ties.

Even amid the collapse in relations between the West and Russia since 2022, Russian energy has continued to flow to Western countries, Western technology has continued to enter Russia, and Western companies that have said they are leaving Russia have remained.

The massive disruptions required for true economic decoupling from China are unpalatable to the public and the private sector. This reality is reflected in the shifting language of US and EU officials, who now emphasize de-risking instead of decoupling from China.

Chinese and Western companies instead look to continue bypassing restrictions and conducting business, reflecting the resilience of the Chinese manufacturing sector and making it clear that US-Western economic co-dependency is a formidable bond that won’t be easily broken.

This article was produced by Globetrotter, which provided it to Asia Times.

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Israel launches a surprisingly calibrated invasion

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Israel’s “second phase” of its war against Hamas consists of small unit attacks just inside the northern Gaza Strip border, accompanied by continual aerial bombing and artillery fire targeting the interior of the enclave.

One reason for the air strikes is to make sure Hamas doesn’t emerge from the war intact, a NATO general said.

“The air force is used because not all objectives are achievable with targeted ground operations. And because, at this moment, only the air force can carry out the IDF’s main aim: to strike the large network of underground tunnels,” declared the general, who spoke anonymously.

Israel’s continual bombing of the north Gaza Strip and shelling in Gaza is designed to kill, or at least dissuade, Hamas guerrillas from using an extensive tunnel network to ambush Israeli soldiers.

From the air, breaking into Hamas’ tunnel system should not be difficult, the NATO official said. “The bombs must go deep and explode underground. There are two types. For instance, one type is simple, enters at a certain depth with a delayed explosion that explodes underground,” he explained.

Israel has added an armed element that is needed to undo perhaps the most unexpected facet of Hamas’ October 7 surprise invasion: the taking of Israeli and other nations’ citizens as hostages.

It has dispatched commando units to rescue them. The use of special units to scour Gaza for the hostages answers domestic and international pressures, especially from relatives and friends of the missing, to free the hostages alive.

Late Monday, in an apparent first success of the effort to liberate hostages, Israel announced that one captive female soldier had been rescued by a military unit. Israeli officials say there are 238 others still in captivity.

It is unclear whether Israel’s current tactics stem from a long-standing invasion strategy or were devised this month in response to Hamas’ surprise raid. Some 300,000 Israeli troops were quickly gathered outside Gaza’s borders and it appeared that the force would invade quickly and massively.

Israel’s government is under pressure to secure the freedom of hostages taken by Hamas. Image: YouTube Screengrab

Instead, tactics in Gaza so far seem more agile. They apparently stem from lessons learned from adverse experiences in 2006, when Israel invaded southern Lebanon. That war was ignited when Hezbollah, the Iran-backed Shiite Muslim militia, abducted two Israeli soldiers and spirited them across the border.

Hezbollah guerrillas, emerging from underground tunnels, were able to thwart the Israeli advance at several points. After weeks of fighting, which included some Israeli air assaults on Lebanese infrastructure, the United Nations and the Lebanese government’s army arranged to patrol south Lebanon as a buffer zone.

The Israelis withdrew; the bodies of the two abducted soldiers were eventually found dead.

This current Hamas conflict has created a crisis of confidence that Israeli officials are trying quickly to end. Indeed, having apparently lacked, or ignored, intelligence about Hamas’ armed capabilities and intentions, Israeli officials are reassuring the public it has mapped locations of Hamas’ extensive spiderweb of underground tunnels.

Israel ought to be able to discover and destroy them, said the NATO officer, speaking on condition of anonymity. “The army uses very sensitive technologies to control earthquakes – the machines, for example, pick up vibrations from excavations. Israel’s surveillance tools are very sophisticated,” he said.

Some experts wonder whether Israel, even if it has mapped the tunnels, can really bomb Hamas out of them. “A significant number of Hamas terrorists will likely be able to survive air strikes by hiding in the tunnels below Gaza,” said Bradley Bowman, a senior military affairs researcher at the Foundation for Defense of Democracies, a think tank in Washington.

“It is probably safe to assume that Hamas has stocked those tunnels with significant quantities of food, water, weapons and ammunition,” he added. 

The downside of Israel’s step-by-step approach to defeating Hamas lies in obstacles that might arise as time passes. One is political: pressure from abroad.

Already, several countries are seeing anti-Israeli demonstrations, including the US, United Kingdom and France along with Iraq, Jordan and Turkey. Arab leaders, along with dozens of other countries, including China and Russia, are calling for a ceasefire. All the demonstrators are demanding, at the least, is a “humanitarian ceasefire” to permit supplies of food, water and fuel to enter Gaza from Egypt unimpeded.

The US, Egypt and Qatar have tried to persuade Israel to permit the movement of such supplies, but the Israelis have allowed no more than 20 aid trucks a day since Saturday. Palestinians in the south Gaza Strip looted several UN food storage facilities on Sunday, hauling away flour and other basic food items.

The US also appears concerned that the war might spread elsewhere in the Middle East. Israel and Hezbollah have gingerly exchanged daily artillery fire across their border for most of the past three weeks.

The US rocketed two bases inside Syria over the weekend to retaliate for more than a dozen attacks by Iranian-linked forces on small US military bases in both Syria and Iraq.

In addition, US President Joe Biden has dispatched two aircraft carrier-led flotillas to the eastern Mediterranean Sea to discourage direct intervention in the war by Iran.

US officials are confident that Israel will win the Gaza war. As a result, Washington has tried to address Israel’s plans for the immediate post-war future as well as longer-range efforts to resolve the overall Israeli-Palestinian conflict.

Biden has said he favors the “two-state solution” designed to create a Palestinian state in the West Bank and Gaza. He has yet to offer a diplomatic mechanism for reaching that outcome.

US President Joe Biden favors a two-state solution; Israeli leader Netanyahu does not. Image: NBC Screengrab

In a television interview on Sunday, Jake Sullivan, Biden’s national security advisor, provided Israel’s point of view on both issues. ”They have told us in broad terms that making sure that Hamas can never again threaten Israel, in the way it threatened Israel before, is their core strategic objective,” he said.

“But in terms of what the specific milestones are, that is something that ultimately is up to Israel. This is their military operation, they will make that decision.”

Hamas has articulated no specific policy on how to end the war. Its original 1988 founding charter called for a single state between the Mediterranean Sea and Jordan River. It later said it would accept a Palestinian state along the 1967 borders when Israel conquered the West Bank and Gaza.

Hamas officials say they want a ceasefire and an end to Israeli “war crimes.” More than 8,000 Palestinians have died during the Israeli counterattack.

Netanyahu’s political career has centered on rejecting the two-state solution and on claims to at least parts of the West Bank. Since the Gaza war erupted, he has declined to discuss specific post-war policy, saying only the government will take it up when Hamas is destroyed.

He refuses a ceasefire for any reason.

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Loved or loathed, carbon capture is here to stay 

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Energy, government, and United Nations agencies agree that carbon capture and storage (CCS) is an essential weapon in fighting climate change. The technology will be a central part of the debate at the COP28 conference starting in Dubai on Monday.

But most environmental groups – and many environmentally minded journalists – oppose it, seeking out and playing up arguments for its demise. 

Why is CCS so vital, yet so vilified?

Carbon capture and storage, or its close cousin, carbon capture, use and storage (CCUS), is a suite of technologies for trapping carbon dioxide, the main gas responsible for climate change, from power stations, industrial facilities, and other sites burning oil, gas, coal, biomass, or solid wastes, or emitting CO2 during production, such as in cement-making.

The carbon dioxide is then piped to a location to be safely disposed of thousands of meters underground, in depleted oil or gas fields, or within rock formations containing undrinkable saline water. It also can be used to make fuels, fertilizers, plastics, enhance plant growth in greenhouses, and even to put the fizz into drinks.

The We Mean Business Coalition, 131 companies representing nearly US$1 trillion of yearly revenues, published a letter saying, “We call on all Parties attending COP28 in Dubai to seek outcomes that will lay the groundwork to transform the global energy system towards a full phase out of unabated fossil fuels and halve emissions this decade.” Unabated, in this context, means using capture techniques to keep emissions from warming the planet.

Technology wrongly disparaged

Yet recent articles by Bloomberg, the Financial Times (which reported on the coalition’s letter), The Wall Street Journal, and others address the failings, real or alleged, of various carbon-capture projects. Because the technology is promoted by the oil and gas industry, these reports start from the standpoint that CCS is somehow optional, that it must prove itself, and that it’s at best an undesirable necessity.

This is radically wrong and misleading, and dangerous for successful climate policy.

Currently, about 42.6 million tons per year of capture is operating worldwide. Another 198.2 million tons per year is under construction or in advanced or early development. The International Energy Agency’s sustainable development scenario requires an additional 600 million tons of annual capture by 2030; its net-zero scenario has almost 1 billion tons by then.

Carbon capture and storage is rapidly broadening beyond its original deployments in North America and Europe, to the Middle East, Southeast Asia, and Australia. Saudi Arabia plans to reach 44 million tons of annual capture at Jubail International City by 2035; the United Arab Emirates’ Abu Dhabi National Oil Company recently doubled its 2030 target to 10 million tons.

This is not an “unproven” or “risky” or “too expensive” method, as it’s often labeled; it’s a well-established technology that is accelerating into mainstream use. 

Why, one might ask, not use renewable energy entirely instead of fossil fuels with CCS?

Entirely renewable-based power systems may be theoretically possible, but they’re rare to date, used only in a few small countries (like Iceland), and largely based on hydropower, which has environmental drawbacks of its own and requires suitable geography.

Systems relying solely on high shares of wind and solar are virtually unheard of and, to the extent they exist, are reliant on significant interconnections with other grids.

Including some share of gas-based electricity in the system lowers overall costs significantly and raises reliability. New gas power stations with integrated carbon capture promise very low-cost clean power.

Even more important, many essential industrial processes don’t have a viable non-fossil alternative. These include iron and steel, cement, fertilizers, chemicals, and refining. 

In the case of cement and many chemical processes, the release of carbon dioxide is an integral part of production. Some of the others have electrical or hydrogen-based options, but these are expensive, often technologically unready, and impossible to retrofit to existing facilities. These could be introduced during the 2030s, but we need decisive action on emissions this decade to be anywhere near net-zero by the UN’s target of 2050.

Carbon capture and storage is indeed backed by the oil and gas industry, just as solar power is backed by the renewables industry, and wind power by windy countries. Saudi Arabia, the UAE, Qatar, Norway, Britain, the United States, Australia, Canada and other important fossil-fuel producers have made it a central part of their climate strategies. This is self-interested, but also practical.

Fossil fuels will continue to be a major part of the global energy mix to 2050 and beyond, even in “net-zero” scenarios – and we are far from being on track for those. The more carbon dioxide we emit now, the more we must remove from the atmosphere in the future. Recent news coverage underlines the dismal record of most biologically based carbon offsets – saving forests that weren’t in danger or that burnt down after credits were issued. 

By contrast, CCS, and its special case, direct air capture of atmospheric carbon dioxide, offer verifiable, measurable, permanent disposal.

Instead of attacking and seeking to halt CCS, journalists and environmental campaigners should be holding oil companies and countries to account, demanding that they deliver on their CCS commitments.

They should be scrutinizing policies that fail to support CCS sufficiently, or don’t put it on a level playing field with renewables, electric vehicles, and other more politically favored climate-friendly options. 

And they should ask where some past unsuccessful projects went wrong, and how to avoid similar mistakes in the future.

This article was provided by Syndication Bureau, which holds copyright.

Follow this writer on X @robinenergy.

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