Geopolitical conflicts fueling food, energy insecurity

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The Russia-Ukraine conflict has severely affected two commodity supply chains: food and energy, thereby severely stressing the security of those sectors. Present stressors on global food security are a combination of such forces as Covid-19, climate change and geopolitical conflicts.

The International Monetary Fund (IMF) has observed how the prices of all primary commodities have grown, albeit at varying rates, since the start of the Russia-Ukraine war.

For example, the price of oil in January 2022 was 67.6% higher than at the same point a year prior. Natural-gas prices, similarly, have expanded by upwards of 200% over the same period.

Aluminum prices reached a 15-year high and food prices are likewise rising, with prices of products such as wheat reaching all-time highs. Average food prices from November 2021 to January 2022 were up 21.8% over the same period of the previous year.

Impact of Global Conflict on Primary Commodity Prices. Source: Flexport Special Report

Ukraine and Russia exert significant influence on global food supply chains, exacerbating challenges for low-to-middle-income nations and vulnerable communities already struggling with food insecurity in the aftermath of the Covid pandemic.

About 6 million tons of agricultural goods were shipped monthly to Asia, Africa and the Middle East. In June 2022, this number had shrunk to a fifth of its original value.

According to the UN’s Food and Agriculture Organization (FAO), global food prices have risen by 20%, a significant cause of concern worldwide. It further predicts a rise in the undernourished population by 7.6 to 13.1 million because of the conflict situation in Ukraine and the ripple effect on food prices and supplies.

Every nation within the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) group, with a particular emphasis on India, Myanmar and Bhutan, is heavily dependent on energy imports.

This extensive reliance on fuel trade poses a significant challenge for the region, rendering it susceptible to external economic disturbances. The Russia-Ukraine conflict underscores the critical need for countries to establish more energy self-sufficiency.

Country Most Recent Year Import Percentage
Bangladesh 2015 11
Bhutan 2012 18
India 2021 30
Myanmar 2021 20
Nepal 2021 15
Sri Lanka 2021 16
Thailand 2021 16
Fuel imports in BIMSTEC economies (as a percentage of merchandise imports), Sources: Author’s own, data from World Bank

Rising energy prices driven up by the war have triggered inflationary pressures in many developing countries. Though the effects are not significant enough to hold back economic recovery, they still present global affordability and development risks.

Therefore, a combination of pathways must be taken to tackle the ill effects of the global food and energy risks. Naturally, humanitarian aid for the most vulnerable nations and populations should be the primary focus. Targeted subsidies should be prioritized for vulnerable groups of the developing and underdeveloped world most in need.

Similarly, international aid needs to be reoriented toward agriculture to help improve the food self-sufficiency of African and certain South Asian nations. Research shows that these regions have the potential to feed the world yet are still highly dependent on food imports for their domestic needs.

Additional investments should be made toward climate-smart agriculture in the Global South, which is most vulnerable to climate change. An integrated approach must be taken to promote water and nutritional security by acknowledging the water-food-energy nexus.

In the same vein, international markets have been a source of significant volatility in the global oil market. With most Global South nations being price-takers rather than price-makers for crude oil in the global market, multilateral forums should ideally ensure that such developing countries do not bear the brunt of market fluctuations.

Oil price volatility can be addressed through one of two ways. Better market intelligence and better use of market-based hedging instruments can go a long way in helping economies to adjust their demand based on how much importing fuel will set them back according to possible upcoming price movements.

The energy basket of the world could also be pushed to diversify its energy production. Middle Eastern and African oil-producing nations have already displayed an eagerness to explore non-fossil sources of energy generation, primarily due to the price fluctuations brought on by the pandemic. This will reduce the global dependence on fossil fuels and their volatile prices and ease the transition to green energy.

Finally, the ongoing geopolitical events show how fragile the current global supply chain is to shocks and the potentially disastrous effects they can have. This brings about the need for the adoption of better government procurement mechanisms, support for more rational price mechanisms for producing less resource-intensive but more nutritious food, and the creation of better energy market distribution systems.

At the same time, developing better risk management and hedging mechanisms through market-based institutions and instruments is essential.

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Fears linger over possibly ‘radioactive’ seafood from Japan

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PUBLISHED : 27 Aug 2023 at 17:05

Fears linger over possibly 'radioactive' seafood from Japan
A view of the Fukushima Daiichi nuclear power plant after it started releasing treated radioactive water into the Pacific Ocean, seen from nearby Ukedo fishing port in Namie town, Fukushima Prefecture, Japan, on Aug 25. (Reuters photo)

The Thailand Consumer Council (TCC) has asked the Food and Drug Administration (FDA) and the Department of Fisheries to take strict measures to screen seafood imported from Japan for fear it could be contaminated by a radioactive isotope.

The island country began releasing wastewater from the Fukushima Daiichi nuclear power plant into the ocean on Aug 24.

Panuchote Thongyang, chairman of the TCC’s sub-committee on food, drugs and health products, said on Sunday many countries, including Japan itself, have voiced concerns over the safety of the wastewater despite the green light from the International Atomic Energy Agency (IAEA), which said the released wastewater, which has been treated, meets world safety standards.

He said China, Hong Kong and South Korea have suspended imports of every form of marine product, but no Thai agency has announced any measures being taken to reduce safety risks despite the fact that the kingdom is a major importer of fishery products from Japan.

Mr Panuchote said radioactive substances from the Fukushima Daiichi nuclear power plant, struck by an earthquake over a decade ago, caused many cities to have been declared off-limits. Four years after the disaster, many of those cities were still restricted areas and some of them were completely abandoned. These indicated that the leaked radioactivity had spread to adjoining areas.

“I would like to call for the FDA and the Department of Fisheries to urgently take preventive measures, especially random checks of imported sea food both at checkpoints and at local markets,” he said. “Consumption of sea food contaminated with radioactivity could be hazardous to health.”

Mr Panuchote also called for the two agencies to publicise the measures they have taken to allay fears among consumers.

On Aug 24, the day Japan started releasing the wastewater, FDA deputy secretary-general Lertchai Lertwut said the agency held a meeting with the Department of Fisheries, the Office of Atoms for Peace and the Thailand Institute of Nuclear Technology to lay down measures to examine sea food imported from Japan.

He said consumers should not worry as all imported sea food products are subject to examination at FDA and Department of Fisheries checkpoints with support from narcotics suppression police and the Thailand Institute of Nuclear Technology.

Importation of products found contaminated with radioactive substances must be suspended, and the products returned or destroyed, Mr Lertchai said.

In fact, safety measures on fishery products from Japan have been taken since the Fukushima Daiichi nuclear power plant was struck by a tsunami in 2011. No radioactive traces beyond international standards have been found in those products, Mr Lertchai said.

The FDA deputy secretary-general said that in order to convince people of the safety of Japanese seafood, authorities will double the collection of samples for examination.

The vigilance will remain despite the change of government and the transition of the fiscal years, Mr Lertchai said.

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New govt ‘must act’

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The incoming government must take urgent action to stimulate the economy by injecting budget funds into the system, academics and businesspeople said.

They agree that populist policies can be used to kick-start growth, but also warn against taking loans or using “future money” to fund such policies.

Spurring growth

Somjai Phagaphasvivat, an independent political and economic analyst, said the overriding priority for the new government is to stimulate the economy.

“Growth should rise to 3%. But in the first quarter, it was only at 2.6% while the second quarter saw it dip to 1.8%. During the first half of the year, growth averaged 2.2%. Lots of work must be done to achieve 3%.

“Even if the economy grows to 3%, it is still the lowest in Asean, which has an average of more than 4%,” Mr Somjai said.

The government must step up efforts to stimulate growth and disburse unspent budget funds worth more than 100 billion baht held by state enterprises and public organisations, he said.

The government also must work with the private sector to boost tourism, which is crucial for reinvigorating the economy, he said.

“Efforts have been made to attract 5 million Chinese tourists, but only 3 million have arrived so far,” he said.

Mr Somjai also urged the new government to encourage domestic tourism and promote exports by finding new markets. In the first half of this year, export growth dipped to -5 or -6%, he added.

He added that household debt has risen to 15 trillion baht or 90%, and that even though inflation is low, fuel costs are still high.

“Remedial measures must be directed to clear targets. Power bill subsidies for household users are okay but should be limited to members of the lower middle and lower classes only,” he said.

Mr Somjai also said economic stimulus measures require substantial sums of money, but the country is currently in financial straits, with public debt rising to 61%.

While stimulating the economy, the government must also maintain financial stability and take into account public debt, he said, adding that budget funds for public investment remain only at 20%, compared to 35% as suggested by the Organization for Economic Cooperation and Development.

“The government needs to spur short-term growth, but it must avoid excessive giveaways or handouts that will lead to overwhelming public debt,” Mr Somjai said.

Bread-and-butter issues

Isares Rattanadilok na Phuket, vice-chairman of the Federation of Thai Industries, echoed that view, saying that stimulating growth and addressing the bread-and-butter issues affecting people’s daily lives are a pressing concern.

“The economy is in crisis. Currently, tourism is the only growth engine contributing to GDP while export growth has fallen into minus territory for nine months now.

“Domestic consumption has declined as household debt has risen to 91% per GDP. The new government must stimulate the economy by injecting cash into the system, such as via the digital wallet scheme, with the help of blockchain technologies.

“It is also important to attract more tourists during the high season and facilitate their entry and visa processing. Budget planning for the 2024 fiscal year must be sped up to boost the economy,” he said.

Pheu Thai’s election pledges included a 10,000-baht “digital money” giveaway in which every Thai aged 16 and older will get a new savings account and a digital wallet connected to his or her ID.

The 10,000-baht giveaway is aimed at stimulating spending in local communities in the first six months, with the help of blockchain technology that will ensure the money is spent within a 4-kilometre radius of the recipients’ registered address in an effort to spur the local economy.

However, Mr Isares said the digital wallet scheme should be more selective in giving money to those in need, such as members of the middle and lower classes, and efforts should be made to ensure the money is spent with local SME businesses rather than big businesses.

Regarding high fuel costs and rising power bills, he said the government should initiate price restructuring as a long-term solution rather than diverting state budget funds or taking loans to subsidise fuel costs.

“Borrowing money for quick-win projects to reduce electricity bills or fuel prices will increase unnecessary debt. The government must think carefully about each project and must not borrow or use future money,” he said.

Digital money next year

Kitti Limsakul, deputy Pheu Thai leader and a member of the party’s policy steering committee, gave assurances that once the Pheu Thai-led government takes office, economic stimulus measures will be implemented as quickly as possible.

“It is important to inject cash into the economy to stimulate growth,” he said, while insisting the 10,000-baht digital wallet scheme is in line with the Bank of Thailand’s rules.

“The scheme will start next year. We already have budget funds to support the scheme. It’s not bitcoin. It’s real money from the state budget. We believe the global economy will improve next year and we expect more exports and money in the form of taxes will return to state coffers,” he said.

Apart from stimulating consumer spending, it is also necessary to upskill workers to keep them in line with the minimum daily wage of 600 baht, which is expected to materialise within four years, he said.

“The daily wage will be adjusted gradually. But we have to upskill workers first. Productivity will then increase and the economy will grow,” he said.

Regarding the policy involving the minimum income of 20,000 a month per household, he said that the policy cannot be implemented immediately as it requires a substantial amount of budget funds and a set of criteria must be devised carefully.

As for a proposal for a flat fare of 20 baht for electric trains, he said the incoming transport minister will look into the matter and details should be known next year.

He said that the operations of all electric rail systems may be merged with the use of a common ticketing system. However, the merger will not be easy as the concessionaires of these separate systems may quarrel over their share of profits, Mr Kitti said.

Paopoom Rojanasakul, deputy Pheu Thai secretary-general, said that the 10,000-baht digital wallet scheme is expected to be implemented within the first half of next year as it will take time to set up the system.

Delay in the formation of a new government has also affected the planned budget allocation, he said.

“We will try to ensure that people will receive the 10,000-baht digital money before Songkran so they can spend it in their communities,” Mr Paopoom said.

Doubt over wage policy

Atthayuth Leeyawanich, chairman of the Employers Confederation of Consumer Goods and Services, expressed reservations about the proposed minimum daily wage of 600 baht.

“Things depend on economic circumstances. It remains to be seen if employers can pay. Currently, the average daily wage nationwide is 337 baht and 353 baht for Bangkok and its surrounding provinces.

“The rate must be raised by about 250 baht or about 60 baht per year [if the 600-baht wage is to be implemented]. I want the new government to improve economic growth gradually first so employers can make enough profit and pay more wages to their employees,” Mr Atthayuth said.

“We don’t want political parties to use a minimum wage policy as a ploy to woo support as it will affect operators and employees,” he said.

He also disagreed with the pledge of the 25,000-baht salary for graduates with bachelor’s degrees, saying state agencies can pay the proposed salary, but private companies cannot do so and they may refuse to recruit bachelor-degree holders.

“The salary and wage rates must also correspond to the productivity of employees,” he added.

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Singapore should have ‘mercy’ towards drug mules facing death penalty: Tan Kin Lian

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During the question-and-answer segment, Mr Tan gave his views on a range of topics, from the death penalty and Singapore’s reserves to the rental of Ridout Road bungalows by ministers.

Analysts have repeatedly pointed out that the head of state in Singapore cannot set policies, but Mr Tan has continued to speak about issues such as the cost of living and housing.

On Saturday, he acknowledged that the President is not involved in policymaking, but said he would like to dialogue with the Prime Minister and offer his ideas.

PRESIDENT’S PARDON

The presidential hopeful said Singapore can be merciful to drug mules, and that “many of them come from very poor families”.

“Quite often, they were not aware, they were just tricked into conveying the drugs. I will certainly think that we should have the mercy,” he said.

Mr Tan said he would approach the Cabinet before it makes its decision.

“If the Cabinet decides against me, which they have the power to do, it will be not so respectful,” he said. “I will ask the Cabinet to respect the President.”

According to the Constitution, the President can grant pardon to offenders “on the advice of the Cabinet”.

Dr Felix Tan, a political analyst at Nanyang Technological University (NTU), said Mr Tan can always give his point of view to the Cabinet.

“It’s not just a one-way track and that is the way it should be done,” he said. Dr Tan also noted that there is a legal process that needs to be completed before such a decision reaches the President.

Mr Tan said there may be concerns that pardoning one person means everyone else will have to receive the same treatment, and there will be an influx of drug traffickers in Singapore.

“I don’t believe in that, I think it is okay to be merciful,” he said. But he added that if there is indeed a flood of drug offenders, he will be “not so forgiving”.

SHOULD PRESIDENTS BE APPOINTED?

In response to a comment about rules for presidential candidates, Mr Tan said he agreed that the rules should be changed.

“We spend so much time to elect a president and then we end up telling the president these are the things you cannot do,” he said to laughter from the audience.

Calling it an “unproductive exercise”, he said he believes it may be better to go back to the old system where the President is appointed by the parliament.

Mr Tan also said having a Council of Presidential Advisers is complicated, and that is another reason why he thinks the president should be appointed instead of elected.

NO NEED TO KEEP RESERVES A SECRET

On the topic of Singapore’s Reserves, Mr Tan said he does not think the figure needs to be kept secret.

The Ministry of Finance previously said it is not in Singapore’s national interest to reveal the full size of her reserves because that would make it easier for the markets to mount “speculative attacks on the Singapore dollar” during vulnerable times.

Mr Tan said he disagrees. “According to somebody who has worked in the Ministry of Finance before, he told me the chance of being attacked is quite small, and I agreed with him.”

“I would certainly have preferred that we agree that there is no need for secrecy, why don’t we just tell the people?” he said.

Asked whether the President can reveal Singapore’s reserves, NTU’s Dr Tan pointed out that it is considered a state secret, and the President is not above the law.

“I don’t think that the President is entitled in any way to reveal a state secret,” he said. “There will be consequences.”

Mr Tan also repeated that he thinks Singapore has been saving too much in the reserves.

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Malaysia grows with Time: Catalysing ASEAN’s digital powerhouse

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Envisioning ASEAN’s Digital Future
Malaysia stands on cusp of becoming next digital hub of ASEAN

Malaysia’s digital economy currently contributes 23.2% to the country’s GDP and is set to surpass expectations by 2025. Bolstered by the highest number of Internet users in the region, boasting close to 98% Internet penetration, Malaysia is primed…Continue Reading

Why Africa shouldn’t pick superpower sides

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Some three decades since the end of the Cold War, the world order is undergoing a structural transformation.

At the heart of it is the challenge posed to the hegemony of the US. This is primarily being led by Russia and China which are discontented with Washington’s excesses across the global stage.

The most recent example of this rebellion was the Russian invasion of Ukraine in 2022. Fiona Hill, a British-American foreign affairs specialist, observed that the war was a “proxy for a rebellion by Russia and the ‘Rest’ against the United States.”

The African continent is an obvious contender for major power courting as this realignment takes place. This is for at least four reasons.

Firstly, it is the largest regional bloc in the United Nations, representing some 28% of all the votes in the General Assembly. Secondly, it possesses some crucial raw minerals that are found only in the continent.

Thirdly, it possesses some important sea trade routes, particularly in East Africa. Finally, the continent is home to the fastest-growing youth demographic, and will account for about 42% of the world’s youth by 2030.

I am a scholar of geopolitics and have conducted research on the continent’s trade ties to the major powers. My findings have led me to the conclusion that Africa can gain more by being neutral than by picking sides.

The drivers

Africa’s size in the UN General Assembly can’t be overstated. The continent sometimes struggles to respond in a coordinated way.

Nevertheless, it has, in the past, been able to vote in sync in a way that has proved influential. The most notable example of this was the 1971 vote for the resolution that brought mainland China into the UN and replaced Taiwan. In total, there were 76 votes in favor, of which 27 came from African member states.

In today’s UN, having this large grouping on one’s side helps countries the most when it comes to passing – or defeating – resolutions. With the UN Security Council in gridlock because the five permanent members (China, France, Russia, the UK and the US) have veto power, there has been a shift towards the UN General Assembly, which works on one-member-one-vote.

General Assembly votes are mainly symbolic. But they are a useful indicator of where the international community stands, and are a powerful moral weapon for any major power.

China is seen alternately as benevolent patron and new age colonialist in Africa. Image: Twitter

Africa’s other major attraction is, of course, its resource wealth. This has become even more pronounced and taken on extraordinary importance in the push towards alternative sources of energy, both renewable and non-renewable.

And in the production of products driven by the rise in technological innovation, such as the Democratic Republic of Congo’s cobalt, which is needed to make device screens among other things. The DRC is the world’s leading producer of this crucial mineral.

At the same time, the oil reserves of Algeria, Angola and Nigeria will become increasingly important as countries look to diversify away from Russia for natural gas, and from fossil fuels more broadly.

Then there are the trade routes. The Red Sea route, which straddles northeast Africa and links it to the Indian Ocean, constitutes 10% of annual global trade . The Red Sea route passes countries such as Eritrea and Somalia. Both have been actively courted by Russia.

For its part, China has earmarked the route through its Maritime Silk Road initiative. Its aim is to boost port infrastructure among countries with Indian Ocean coastlines.

Lastly, Africa is home to the fastest-growing youth population. This will be important in the search for future markets, particularly in sectors such as technology and education.

The US and Europe are also keen to tap this human capacity as their own populations age above the global average. Many are looking to Africa as a source of inward migratory flows.

Africa’s ties with the major powers

In 2022, the continent as a whole exported US$43.1 billion worth of goods to the US and imported goods worth $30.6 billion.

By comparison, China exported $164.1 billion to Africa and imported $117.5 billion worth of African goods, in the same year. With African exports totaling $661.4 billion, the US accounts for 6.5% and China 17.7%.

China, the notable growth story of the past half-century, has thus become the African continent’s single biggest trading partner, though the combined power of the European Union’s trading bloc of 27 countries still leads.

China’s ties with the continent are the result of decades of diplomatic and commercial efforts to woo the continent through the Forum on China–Africa Cooperation. Part of this has been driven by its desire to counter the US. The other driving force has been to sustain its economy, given Africa’s untapped potential.

Russia has pursued a different strategy. Given that its trade with the continent is at a minimum – exports and imports were around $18 billion in 2021 – it has rather sought to become a security partner, drawing on sentimentalized Soviet history.

Washington’s principal instrument for growing trade, and encouraging good behavior, in Africa is the African Growth and Opportunity Act, set to expire in 2025. The framework is a lever. But, as the data show, trade is in evident decline.

The general picture can obscure some nuances. Some African states are more deeply intertwined with the US than others. For example, Djibouti has an American military base (along with other states, though not Russia at this point). And Egypt, Nigeria and South Africa are also among the top recipients of US direct investment.

South African President Cyril Ramaphosa and US President Joe Biden. The US is a major investor in the country. Image: Twitter Screengrab

On the other hand, Eritrea, which was the only African state to brazenly vote against the UN General Assembly to condemn Russia’s invasion of Ukraine in 2022, seems to have no aspirations to be in America’s good graces. This notorious outlier aside, the world is deeply intertwined, with high interdependence even among the competing major powers.

The US and China, despite their trade war, have struggled to decouple from one another, with their bilateral trade reaching new heights as recently as last year.

In light of the comparatively diminished US-Africa trade, the US may be looking to make use of third parties. It could potentially influence the EU to influence Africa. The Huawei issue demonstrates this.

The US has successfully pressured quite a few of its allies to halt doing business with the Chinese technology giant. According to Unctad data, France ($60 billion) and the UK ($65 billion) are the principal holders of African assets.

As these and other European states seek to “de-risk” from China, there may be third-party consequences for Africa. This might include undue pressure on the continent to behave in certain ways towards China and toward Russia.

Picking sides a bad option

Recent research, including my own on US-China trade “competition” over Africa, shows that the prevailing notion that smaller countries need to “pick sides” in polarized global contexts is false. Africa is best served when it conducts trade with as many partners as possible.

Indeed, as shown, the major contenders are themselves conducting record-breaking trade with one another.

All the while, Europe continues to conduct trade with Russia following the war against Ukraine (indeed, it is growing in some respects).

The continent can, therefore, afford to be neutral. What it cannot afford to do is pick sides and preclude any partnerships. In the oncoming multipolar order, there are no self-evident, African-specific needs to pick sides. All options can be on the table.

Bhaso Ndzendze, Associate Professor (International Relations), University of Johannesburg

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

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BRICS expansion a big step in a long game

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The BRICS grouping of major emerging economies – Brazil, Russia, India, China, and South Africa – have agreed to invite six new member nations to their increasingly powerful club. South African President Cyril Ramaphosa made the marquee announcement this week at the conclusion of the annual BRICS leaders’ summit, held in Johannesburg. 

While Western pundits have broadly dismissed the BRICS as still in its infancy, the inclusion of Argentina, Egypt, Ethiopia, and Iran – as well as major energy producers Saudi Arabia and the United Arab Emirates – represents a significant shift that can’t be easily dismissed. 

From the outset, BRICS was an organization defined by a seemingly unrealistic optimism. The term “BRIC” was developed by economist Jim O’Neil in 2001 to highlight the strong growth rates in Brazil, Russia, India and China in the wake of the September 11 attacks on the United States. 

Throughout the 2000s, emerging market economies became a subject of investment fascination and, so many argue now, irrational exuberance. 

Turkey was the poster child of this excitement. The rise of Turkey’s economy in the late aughts, for example, was compounded by the country’s benevolent soft power approach to having “no problems with neighbors.”

This economic and geopolitical strategy propelled the Turkish economy and spurred investment but has been under immense strain in recent years. Unfettered optimism about the rise of the global middle class in emerging markets defined the buoyant mood when the initial BRICs held their first summit, in 2009.

Today, BRICS is dominated by China, its most powerful member. There is less sycophantic writing about the rise of a new middle class. Emerging markets are struggling along with China’s economy.

Yet, the foundation for deeper integration between nations outside the West has been laid. China is working to set this foundation and capitalize on these connections while ensuring its economic and foreign policy objectives drive the shifts.

The invitation to Saudi Arabia and the UAE is a vivid example of this strategy. One of China’s primary geopolitical and economic interests is breaking the dollar’s oil and gas trade dominance.

When Saudi Aramco floated the idea of an IPO, Chinese state entities expressed interest in taking a minority stake. That never happened, but China has invested handsomely in the Saudi economy and its oil sector.

The Chinese have also emerged as a valued mediator between Saudi Arabia and Iran. In March, Chinese diplomats brokered a reconciliation deal between the two countries in a move that surprised and embarrassed Washington. Including Iran and Saudi Arabia in BRICS+ will increase China’s clout in the Middle East. 

Not all countries were so quick to open membership to BRICS. Brazil was notably cautious about including new members but is undoubtedly pleased by the inclusion of Argentina. The two South American countries have grown increasingly close in recent years to the point of working on a shared currency. 

The entrenchment of alliances like these across the Global South is one of the major takeaways from the rising influence of BRICS. Western pundits have argued that the bloc is all talk and no action, but small steps are laying the groundwork for a new version of the global economy.

Trade between BRICS countries surged 56% between 2017 and 2022, to US$422 billion, an upward trend that looks certain to continue. 

Naturally, the US looms large behind these developments. South Africa, for example, has walked an incredibly fine line throughout the BRICS summit so as not to anger the US. In a televised national address on the eve of the summit, President Ramaphosa said that South Africa wouldn’t be drawn into a contest between global powers. He then reaffirmed South Africa’s non-aligned position on the Ukraine conflict. 

The two countries have been at odds since America’s ambassador to Pretoria, Reuben Brigety, accused South Africa of illegally selling weapons to Russia last year. US lawmakers have raised the possibility of removing South Africa from AGOA, a free trade agreement between the US and several African nations vital to South Africa’s economy. 

Despite the rhetoric and threats, American companies, such as Ford, benefit tremendously from the current trade relationship with South Africa. Any real change to this arrangement is unlikely because it would hurt the US economy. 

This saga highlights the complicated situation the US finds itself in with the rise of BRICS. Put simply, several countries that depend enormously on the American economy for trade and military support are now deeply cooperating with Russia and China through the bloc, and Washington can’t or won’t do much about it. 

Could we imagine the US being openly critical of Saudi Arabia and the UAE over its new membership in BRICS? Not at all. America has failed to take South Africa, a much less powerful country, to task for its questionable ties with Russia. The US has run out of carrots and sticks as BRICS expands and deepens cooperation across the Global South.

From a long-term Chinese perspective, the best course of action is to slowly continue building the infrastructure of a non-aligned global economy through groups like BRICS.

Eventually, the trade partnerships and cooperation between these countries will be too entrenched to ignore, and more significant changes to the global order, such as unseating the US dollar as the global reserve currency, will be feasible. China knows this, which is why President Xi Jinping attended the meetings in person.

While this won’t happen any time soon, the basis for such a future is being assembled.

Joseph Dana is a writer based in South Africa. He has reported from Jerusalem, Ramallah, Cairo, Istanbul, and Abu Dhabi. He was formerly editor-in-chief of emerge85, a media project based in Abu Dhabi exploring change in emerging markets. Twitter: @ibnezra

This article originally appeared on Syndication Bureau and is republished by Asia Times with permission.                                             

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Fukushima: The fishy business of China’s outrage over Japan’s release

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A woman selling fish at a market in Shanghai, China on 24 AugustEPA
By Frances Mao
BBC News

Japan has called on China to remove a total ban on its seafood products, imposed after Tokyo began the scientifically-endorsed release of treated water from its Fukushima nuclear plant.

China, the leading buyer of Japan’s fish, announced on Thursday it was making the order due to concerns for consumers’ health.

However, the claim is not backed by science – with the consensus from experts being that the release poses no safety risks to ocean life or seafood consumption.

“The main reason is not really the safety concerns,” international trade law expert Henry Gao told the BBC. “It is mainly due to Japan’s moves against China,” he said, noting Japan’s closer alignment to the US and South Korea in recent years.

Following the waters’ release on Thursday, International Atomic Energy Agency (IAEA) monitors at the site said their tests showed the discharge had even lower radiation levels than the limits Japan has set – 1,500 becquerels/litre – which is about seven times lower than the global drinking water standard.

And despite Japanese fishermen’s fears, analysts say the trade hit to Japan’s industry will be short-lived and less than expected.

The main market for Japan’s fish remains its domestic one.

Locals consume most of the catch, so top seafood companies Nissui and Maruha Nichiro have both said they expect limited impact from China’s ban. Both companies’ stock prices were slightly up at close of trade on the day of the ban’s announcement, Reuters reported.

Beyond China, no other country has even hinted at a total ban – South Korea still bans seafood imports from Fukushima and some surrounding prefectures.

Experts say even people who scoff down lots of seafood will be exposed to only extremely low doses of radiation – in the range of 0.0062 to 0.032 microSv per year, said Mark Foreman, an associate professor of nuclear chemistry in Sweden.

Humans can safely be exposed to tens of thousands of times more than that – or up to 1,000 microSv of radiation per year, Associate Prof Foreman said.

Price to pay is not so high

Japan’s government has admitted the local fishing industry will likely take a significant hit.

It had previously criticised Beijing for spreading “scientifically unfounded claims”, and on Thursday evening, Prime Minister Fumio Kishida again beseeched Beijing to look at the research.

“We have requested the withdrawal (of China’s ban) through diplomatic channels,” Mr Kishida told reporters on Thursday night. “We strongly encourage discussion among experts based on scientific grounds.”

China and its territories Hong Kong and Macau – had already instated a partial ban on seafood from some Japanese areas- but authorities now expanded that net.

Mainland China and Hong Kong are Japan’s biggest international seafood buyers respectively, buying about $1.1bn (£866m) or 41% of Japan’s seafood exports.

Local media reported that following China’s ban, the head of a Japanese fisheries association called Japan’s Industry Minister, urging him to lobby Beijing to retract the ban.

But industry watchers are calm, knowing the usual vagaries of supply and demand in global trade.

Prof Gao said he expects some short-term disruption but “soon the exporters shall be able to shift to other markets so the long-term effect will be small.”

A cardboard sign with Japan's Prime Minister Fumio Kishida is seen during a protest in Hong Kong on Friday after Japan released treated radioactive water from the crippled Fukushima nuclear plant into the sea

Reuters

And on the other side of the trade, restaurants in Chinese cities won’t be lacking in seafood delicacies. Japan supplies just 4% of the seafood China buys from abroad- Beijing buys much more from India, Ecuador and Russia, according to Chinese customs data cited by Reuters.

China’s ban on seafood will also barely scrape Japan’s overall economy.

Marine products make up less than 1% of Japan’s global trade, which is driven by car and machinery exports. Analysts say the impact of a seafood ban is negligible.

“The Fukushima water release is mostly of political and environmental significance,” Stefan Angrick, an economist at Moody’s Analytics, told Reuters.

“Economically, the ramifications of a potential ban on Japanese food shipments are minimal.”

Still, public perception around the industry’s damage and safety persists, not just in China, but South Korea where there have been crowds protesting.

In the months leading up to the water’s release, fishermen in South Korea reported a notable decline in the sale value of their catch – but prices remained stable the day after the release.

At home in Japan, polling also shows a divide. The government has made significant efforts to both reassure citizens and appease the industry. It has promised subsidies and an emergency buy-out if seafood sales dive.

On Friday, Osaka authorities proposed to serve Fukushima seafood at government buildings. Meanwhile, the company running the Fukushima plan, Tepco, said it would also provide compensation to local businesses if they suffered poor sales.

But locals are also hardy. Following China’s announcement on Thursday, many Japanese on Twitter even celebrated the ban – wryly suggesting it could mean cheaper fish at home.

“Good news amid inflation…. Even Hokkaido sea urchin will be super cheap,” one user tweeted.

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China shifting from extraction to investment in Africa

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In: Asia

China experienced a massive economic boom in the 1990s and 2000s which increased its demand for resource imports, like oil, from Africa. That led to a model of development finance in which China funded infrastructure in African countries in return for access to resources.

This approach became known as the Angola model, because it all started with an infrastructure-for-petroleum partnership between China and Angola in 2004. Within a decade, however, a shift in China’s approach was needed, for a couple of reasons.

First, African countries are vulnerable to shocks and they struggle to keep up with mounting debt repayments. For instance, in Angola’s case, the price of oil fell from a high of US$115 to below $50 in mid-2014. More recently, the impacts of Covid’s economic shutdowns and supply shocks related to the war on Ukraine are taking a toll.

Second, China’s domestic needs are changing. In recent years, climate change and changing diets have put pressure on China’s domestic supply of food. This triggered interest in partnerships that could help.

China is also moving away from being an exporter of heavy-industry and energy-intensive manufactured goods. Its focus is more on growth areas, such as higher value-added agriculture and manufacturing. Geopolitically, it also wants to support African development and its own food security.

My study of these shifts reveals a changing relationship between China and Africa, moving beyond a focus on mainly oil and extractive commodities. The new focus is more on industrial production, job creation, investments that lead to African exports and productivity-enhancing agricultural and digital technology opportunities.

This model, called the “Hunan model”, is named after the province in southern China that is leading the push. African bureaucrats, researchers, trade associations and businesses should understand what’s happening in Hunan. It will help them to grasp new opportunities and ensure that African companies are competitively placed.

What is the ‘Hunan model’?

The Hunan model aims to support the 2035 Vision for China-Africa Cooperation by pushing for:

  • medical cooperation,
  • poverty reduction and agricultural development,
  • trade,
  • investment,
  • digital innovation,
  • green development,
  • capacity building,
  • cultural and people-to-people exchange,
  • peace and security.

The delivery of those goals happens under the umbrella of the China-Africa Economic and Trade Expo and a pilot zone for in-depth China-Africa Economic and Trade Cooperation. Both are centred on Changsha, the capital of Hunan province.

Hunan province was chosen as the new frontier of China-Africa relations partly because many of China’s competitive industries are based there. They include major agri-tech companies, a leading Chinese electronic vehicle company (BYD Changsha), and manufacturing equipment and construction industry companies.

Many of these companies have a presence in, and long-run strategy for, African markets.

China-Africa Economic and Trade Expo

The China-Africa Economic and Trade Expo has many activities and events hosted in big exhibition centers. This allows new business partnerships to be forged with speed and logistical ease.

At a 2023 event with 10,000 Chinese and 1,700 foreign participants, it was reported that 120 projects, worth a total of $10.3 billion, were agreed upon. All 53 African countries with which China has diplomatic relations were present.

An exhibitor presents Ethiopian coffee during the third China-Africa Economic and Trade Expo at the Changsha International Convention and Exhibition Center in Changsha, central China’s Hunan Province, June 29, 2023. Photo: Xinhua / Sun Ruibo

Pilot zone

The pilot zone for in-depth China-Africa Economic and Trade Cooperation is a huge area that’s been developed with the aim of expanding bilateral trade, dealing with bottlenecks in trade and cooperation and improving logistics between the two regions. Examples of typical bottlenecks include market access, finance, logistics, talent and services such as marketing and law.

Some of the initiatives that can be found in the pilot zone include vocational and education training and a digital services hub that supports Chinese companies in the efforts to economically engage Africa. The zone includes a permanent exhibition platform and a demonstration park.

Some implications of the shift

The Hunan model’s specific focus is on agriculture, heavy industry equipment and transport such as electric automobiles and trains. These are areas where Hunan is a leader within China. And they are growth industries in many countries in Africa.

For China it may lead to new sources of food security as well as new markets for technology products and opportunities to set technology standards. The approach thus places Africa in an important position for grasping new opportunities and shaping related areas of cooperation – at home, with China and globally.

The Hunan model also seeks to support more efficient trade. New trade passageways by rail, river, air and ocean are being forged to connect Hunan better with African countries, especially trade hubs. There are also efforts to tackle issues of access to foreign exchange and foster greater use of local currencies.

At the moment a lot of international trade is done in the US dollar, because it is widely accepted across all countries. But many developing countries struggle to accumulate dollars if they don’t have a commodity like oil or gas to export. Small and medium-sized (SME) traders struggle in particular, and are less able to bear any currency risks against the value of their own local currency.

The zone in Hunan includes a center that is testing trade payment systems based on other currencies. This could become a broader model for SME-based trade in local currencies.

Ultimately, China’s Hunan agenda will mean different things for different African countries and will evolve over time. It’s a recent shift, since 2018 especially. But, beyond its potential to elevate food security and production capacity in China and African countries, there will be other important implications.

It may facilitate digital and communications logistics for trade between China and Africa, as well as research on technology, industry and trade standards, and trade flows and trends.

Lauren Johnston is a senior researcher at the South African Institute of International Affairs and an associate professor at the China Studies Center, University of Sydney.

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

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New label to assure no harm to animals

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In: South-East Asia

PUBLISHED : 25 Aug 2023 at 04:00

The Department of Agriculture will introduce a new label for coconut products that were not made with coconuts that were harvested by monkeys.

The introduction of the Monkey Free Plus (MFP) label followed accusations from the People for the Ethical Treatment of Animals (Peta), which have harmed the export of cocunuts and coconut-based products to the United States, Canada, Europe and other markets, said the department’s director-general, Rapibhat Chandarasrivongs, yesterday.

A group of coconut milk producers had in July urged the government to act against the allegations and hire a lobbyist to defend the industry’s interests after it was claimed that the monkeys used in the harvesting of coconuts in Thailand are often abused.

Peta tweeted on its account: “Reminder that if you see ‘Thai’ or ‘Thailand’ on a can of coconut milk, leave it on the shelf. The Thai coconut industry kidnaps countless monkeys as babies & later forces them to pick coconuts.”

An industry source said the reputation of Thailand’s coconut industry has been hurt by Peta’s allegations, which were first made in July 2020. The claims resurfaced in November last year before emerging again in the middle of this year.

Consumers will be able to trace the origin of the coconuts contained in products registered under the new certification system, Mr Rapibhat said.

A formal announcement on the details of the certification process will be announced in the Royal Gazette, he said.

“In the beginning, the department will be working together with the private sector to encourage coconut growers to get their crop certified,” he said.

“The label will be promoted along with the existing Good Agricultural Practice [GAP] guideline in an attempt to help coconut growers meet modern industry standards,” said Mr Rapibhat.

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