Europeans froze the largest trade deal with China

Brussels is looking for an alternative in the USA and India

Dmitry Migunov

The European Parliament on May 20 froze the ratification of the investment agreement between the EU and China. The reason was foreign policy friction between Brussels and Beijing. It is not yet clear whether the document will be returned to the vote. A split in relations between two of the three largest economies in the world may prompt the EU to seek other alliances, or perhaps to rely primarily on its own forces and active protectionism. Details – in the material “Izvestia”.

China-EU relations in recent years have been an almost equal combination of love and hate. For the European Union, China was the second most important export market (about € 250 billion a year). Especially for critical industries like mechanical engineering. In turn, the importance of the European market for China was no less important. Although it was inferior to the American one in terms of supply, it grew faster and more stable.

At the same time, Europe has become the most important target for the export of capital from China. Accumulated Chinese investment reached $ 350 billion by the end of 2019, again second only to the United States. Investments in European countries fit perfectly into the Belt and Road project, whose main task was to create in Eurasia a reliable alternative to the United States as a destination for Chinese exports. 

Within this framework, Chinese companies have actively invested in enterprises in Germany, Italy, France, Hungary and other countries. Manufacturers of car tires, household appliances, oil and gas companies, airports and football clubs – it will be difficult to name a field of activity in Europe, wherever a Chinese investor has penetrated, both private firms and corporations with state capital. 

Mutual rhetoric sometimes blunt

Despite this flourishing relationship, mutual rhetoric was sometimes blunt. In March 2019, the European Commission named China as its “systemic competitor.” Given that this happened in the midst of Donald Trump’s declared trade war, this was not good news for China. Later, the conflict was mitigated, among other things, due to the fact that Trump’s anger fell on Europe itself. Americans began to impose trade duties against European countries, threatening retaliation for the introduction of a “digital tax” and other actions in the economy that the previous US administration took as unfriendly.

In December last year, the EU and China signed the largest investment agreement in European history. Its essence boils down to facilitating the access of European companies to the Chinese market, which was able to withstand even the blow of the pandemic (the only large economy that avoided contraction in 2020). Companies that supply high-tech goods to the PRC have received especially favorable working conditions. China, in turn, received guarantees for its investments in the EU, as well as access to the renewable energy market, where the two sides are simultaneously the two largest players and strategic partners by a wide margin.

However, the signed treaty had to go through a difficult and lengthy ratification process. And something went wrong here. First of all, the power has changed in the United States. The new government, at least at the level of rhetoric (and in some places in fact, for example, on the issue of Nord Stream 2), made concessions to the European states. The transatlantic relationship again came to the fore, and China was no longer vital partner.

The diplomatic conflict turned into a reciprocal exchange of strikes when the sanctions imposed on China (not too significant) were followed by a similar targeted response from an Asian country. This is most often the end of the conflicts. This time everything went much further. The European parliamentarians with an overwhelming advantage – with 599 votes out of 687 possible – voted to freeze the ratification of the agreement.

This is not final decision though

Note that this vote is not a final decision and, in fact, has no legal force as such. But the ratification process may be slowed down for a long time. During this time, foreign policy and economic circumstances may well change. And the attitude of individual countries to the agreements.

I must say that the Europeans did not sit idly by all these months. In the course of the trade conflict with the United States, it seemed that the EU and China would inevitably move closer. Brussels is now considering other options for economic integration. The most obvious option is trade agreements with the United States. In early May, German Chancellor Angela Merkel called for the same deal with America that was agreed with Canada last year.… This agreement was already in the air in the middle of the last decade. The parties had already begun negotiations on a Transatlantic Trade Partnership, but in early 2017, the United States canceled a similar trade alliance with the countries of East Asia and Latin America. The last agreement was “killed” at the stage of full readiness. On both sides of the Atlantic they decided that the treaty had no chance at all.

In all fairness, Merkel’s approach is not shared everywhere on the continent. French President Emmanuel Macron has repeatedly stated that Europe should not rely on other superpowers and should show more independence. Questions can also arise overseas, where, despite all the rhetoric of multilateralism and free trade, slogans like “buy American” are gaining momentum. And the full employment promised by the new American administration is unlikely to be achieved if we give even more privileges to foreign manufacturers in their market.

Protectionism is gaining strength

It is possible that the EU will turn in a different direction. In April, it became known that Brussels is negotiating with India on a global infrastructure plan. That should become a competitor to the Belt and Road. It should include cooperation in third countries, the exchange of scientific and innovative ideas and the drafting of uniform standards, especially in the field of financial sustainability. All this should tie the third largest economy in Asia (and the second in terms of purchasing power parity) more closely to the European Union.

India is not yet a player capable of replacing China and the United States as an economic partner. Rather, an agreement with it could become a demonstration of a course that presupposes self-reliance in Europe. Such a line in the economy is becoming more and more popular, given that protectionism is gaining strength in all regions – and the European Union can in no way be an exception .

Kind nuclear neighbor: What is known about the new project of Putin and Xi Jinping

Об этом сообщает “Рамблер”

By Elena Proshina

Vladimir Putin and Xi Jinping will open a new joint nuclear project between Russia and China on May 19, TASS reports with reference to the Chinese Foreign Ministry . Details of the project are classified. The Chinese Foreign Ministry only announced that the leaders will participate in the presentation via video link. They did not specify what kind of object they were talking about.

Previously, Russia and China collaborated on the construction of four power units at the Tianwan NPP and the CEFR Demonstration Fast Nuclear Reactor. What do they say about the project in Beijing? Konstantin Shchepin, a Russian journalist in China:

“Judging by the open information, we already have a lot of projects in the nuclear power industry. This is the famous Tianwan NPP, which is being built in the Jiangsu province and where more and more power units are being built based on our VVER-1200 reactors. These are uranium enrichment plants in Gansu province. It is said that Beijing and Moscow have long been carrying out a project of a new generation of fast breeder reactors somewhere near Beijing. But there is very little information about this in the official media.

Perhaps this experimental reactor will be officially put into operation. These are my guesses. In Beijing, nothing has been written about this yet, it was the message that went through, everyone was surprised, everyone was inspired, everyone froze in anticipation and opened their eyes – what would it be. But so far the people are perplexed. Maybe this will also start a new project: China and Russia have already quite a long time ago, in my opinion, even last year or the year before, agreed on the construction of nuclear power plants in the northeast of China. It is not clear yet.”

In June 2018, after a visit to China, Vladimir Putin said that the countries had agreed on the construction of two power units of the Tianwan NPP by Rosatom , and also agreed on the construction of another Russian-designed nuclear power plant in China. Construction was scheduled to begin in December 2020.
Representatives of Rosatom and the Chinese National Atomic Corporation have already signed a general contract for the construction of the seventh and eighth units of the Tianwan NPP. According to the head of Rosatom, Alexei Likhachev, in May it is planned to “build the first concrete at the seventh power unit.”

Power unit of the Tianwan NPP launched with the assistance of Russian specialists


The work on the physical start-up of the Tianwan NPP in China was completed on September 30 with the participation of the state corporation Rosatom, the press service of the company reports.
The last stage of work on the launch of the Tianwan NPP was the bringing of power unit 4 to maximum capacity, which was carried out on September 30 with the technical assistance of specialists from the Engineering Division of Rosatom.
Rosatom noted that the physical start-up of the reactor was completed ahead of schedule


Russia and China will build a station on the moon


The Russian and Chinese sides signed a memorandum on the creation of a lunar station. This is stated on the website of “Roscosmos” .

Representatives of the governments of Russia and China – the head of Roscosmos Dmitry Rogozin and the head of the Chinese National Space Administration (KNKA) Zhang Kejian – signed a cooperation agreement in the format of a video conference. The parties agreed to be guided by “the principles of parity distribution of rights and obligations” and to use “outer space for peaceful purposes in the interests of all mankind.”

The memorandum specifies that the planned lunar station is intended “for multidisciplinary and multipurpose research work,” and considers the further prospect of the presence of a person directly on the moon. The agreement implies both joint planning, development and implementation of the project, as well as its presentation to the world community.


“Russia and China traditionally strive to develop cooperation in the field of space technologies”, – is specified in the conclusion of the agreement.


The document also implies the cooperation of the Russian mission with the orbital spacecraft Luna-Resurs-1 (OA) and the Chinese mission to explore the polar region of the Moon, Chang’e-7.
At the end of 2020, China, which had previously sent a mission to the moon, planted a national flag on the surface of a natural satellite of the Earth. Thus, the country became the third – after the USA and the USSR – power to plant its flag on the moon.

Russia and China agreed to extend the Neighborliness Treaty


The treaty on good-neighborliness, friendship and cooperation, which Russia and China have agreed to automatically extend for another five-year period, will be filled taking into account new realities and will give impetus to the development of bilateral relations, said Chinese Foreign Minister Wang Yi.

“This year marks the 20th anniversary of the signing of the Treaty on Good Neighborliness, Friendship and Cooperation, which is very important. Over the past 20 years, this agreement has laid a solid legal foundation for the healthy, sustainable development of Russian-Chinese relations and contributed to the optimization and modernization of bilateral relations.

We have agreed on the automatic extension of this agreement, and we must constantly give this agreement a new content, taking into account the realities of the era, so that it adapts to the new conditions of Russian-Chinese relations. I think that this agreement will certainly help us to reach new agreements and give a new impetus to the development of relations, ”TASS quotes a statement by the head of the PRC Foreign Ministry, made before the talks with Russian Foreign Minister Sergei Lavrov

As Wang Yi noted, in recent days, “a handful of European powers have been on the international stage with accusations against China and Russia, but they know that [this is] a lie under a far-fetched pretext, and [once successful] attempts to interfere in the internal affairs of China and Russia have gone far into the past. ” Wang Yi stressed that despite the changing international environment, “our determination to uphold international justice remains unchanged.” “These attempts cannot prevent China from moving forward and cannot change the historical trend,” concluded Wang Yi.


The day before, Russian Foreign Minister Sergei Lavrov arrived in China on a visit. Earlier, Lavrov, in an interview with Chinese media, said that the Treaty of Good Neighborliness, Friendship and Cooperation with China “has successfully passed the test of time and the obligations recorded in it are being sacredly fulfilled,” thanks to the document, relations between the countries reached an “unprecedented level.”


Recall that on March 1, the Ministry of Defense of the PRC characterized the Russian-Chinese relations in the military sphere as a partnership in comprehensive strategic interaction. In early January, Chinese Foreign Minister Wang Yi said that strategic cooperation between Russia and China has no end, no upper limit, and no exclusion zones.

Then in November 2020, Beijing announced China’s readiness “side by side with Russia to jointly oppose one-sided policies, protectionism and hegemony” of states that “strike a blow at international relations and international order.” In October, Russian President Vladimir Putin at a meeting of the Valdai Discussion Club admitted the possibility of concluding a military alliance between Moscow and Beijing.


September 2020, the Chinese Foreign Minister stressed the special importance of relations with Russia, and Chinese President Xi Jinping, in a congratulatory telegram to President Vladimir Putin on the occasion of the 75th anniversary of the Victory in World War II, announced China’s readiness to join forces with Russia for the sake of global peace, security and prosperity for future generations.

Food has become one of the main points of growth in trade between the PRC and the Russian Federation

Trade in food products in recent years has become one of the key points in the growth of economic cooperation between China and Russia, said Russian Trade Representative to China Alexei Dakhnovsky on Tuesday, speaking at the opening ceremony of the Russian pavilion at the SIAL food exhibition.
On Tuesday, within the framework of the SIAL international food exhibition in Shanghai, a joint stand of the Russian Federation was opened; 18 Russian companies are represented on an area of ​​400 square meters.


“Trade in agricultural products and food products in recent years has been one of the key points of growth of bilateral economic cooperation between our countries. China is the largest importer of these products, Russia has something to offer from this range, the high quality of which is in high demand among the Chinese consumer,” Dakhnovsky said, follows from the widespread video recording of the opening ceremony.


He stressed that the pandemic and quarantine measures that exist in China today have certainly had a negative impact on trade in this area. However, according to the trade representative, with the exception of seafood, in the first quarter of this year, the volume of Russian food products exports to China increased by 17.6%.

“Therefore, companies from Russia pay serious attention to their work in the Chinese market and work at the Chinese international food exhibition. We are confident that the products of Russian companies presented here will find their customers. I wish all the participants of the Russian exposition successful work at the exhibition.” added Dakhnovsky.


According to the General Administration of Customs of the PRC, the trade turnover between Russia and China in the first four months of 2021 increased by 19.8% compared to the same period last year and amounted to $ 40.2 billion.


The official representative of the Ministry of Commerce of the PRC, Gao Feng, said that China expects that trade with Russia will reach a new maximum by the end of this year.


At the end of 2020, trade between the two countries fell by 2.9% and amounted to $ 107.76 billion.

China bought helicopters from Russia for $ 2 billion


In 2019, China bought 121 helicopters from Russia for $ 2 billion, the state corporation Rostec reported.


We are talking about 68 Mi-171 helicopters, 18 Mi-171Sh helicopters, 14 Mi-171 helicopters with a VK-2500 engine and 21 Ansat helicopters. All versions of the Mi-171 are produced at an aircraft plant in Buryatia. China plans to supply 86 helicopters with Ukrainian engines.


The cost of only 100 Mi-171 helicopters can exceed $ 2 billion, expert Konstantin Makienko estimated . One “Ansat” can cost China at least $ 3.3 million.


The contracts for helicopters are the largest known with China after Russia supplied China with Su-35 fighters and S-400 anti-aircraft missile systems, said Vasily Kashin , a spokesman for the Higher School of Economics . There are about 500 Mi-8 or Mi-17 helicopters in operation in China. China also produces its own Z-20 and Z-18 helicopters, but, apparently, their characteristics do not satisfy the army, Kashin suggested.

Chinese Foreign Minister calls relations with Russia “unlimited”


Chinese Foreign Minister Wang Yi commented on the strategic relationship between Beijing and Moscow. They have no “no-go zone” or “upper limit”, RIA Novosti quoted a diplomat who was interviewed by Xinhua News Agency and China Central Television.


The PRC Foreign Minister admitted that last year the Chinese-Russian relations withstood the test of the pandemic and reached a qualitatively new level. At the same time, the countries continue to cooperate on the containment of coronavirus infection and research on the development of vaccines.


“Collaboration in new formats such as digital economy and e-commerce is expanding rapidly,” concluded Wang Yi.

Can Australia achieve economic growth without China?

By Stan Grant

China, India, Indonesia, Russia, Brazil: What do these five countries have in common?

They are the future. Our future depends on them. They are not the West.

Collectively, they will account for more than half of all global growth through to 2024, according to figures from the International Monetary Fund. Think again about that: five countries, 50 per cent of growth.

The giant among the five is, of course, China. It has already surpassed the United States as the biggest engine of global economic growth — 28 per cent annually between 2013 and 2018.

By the end of this decade, China is expected to overtake America as the single biggest economy in the world. And of the other four countries — Brazil, Russia, Indonesia, India — each lists China as its biggest trading partner.

The IMF says there is no way the global economy can grow unless these countries also grow. Yet in this week’s budget, did we hear mention of any of them?

No. We did not even hear mention of China. Incredible, given China is Australia’s biggest trading partner, too.

How is Australia handling this hinge point of history?

Australia’s trade with China dwarfs its trade with any other country: more than $90 billion, an enormous 43 per cent of all our exports. For comparison, the next biggest market is Japan, at $19 billion.

Trade is equivalent to 45 per cent of Australian GDP and one in every five jobs in the country.

Treasurer Josh Frydenberg has said this budget is about stimulating, spending and creating jobs. How do we seriously achieve that when our political leaders cannot speak to their counterparts in Beijing? 

In the meantime, we hear increasing talk of the “drumbeats of war”. How can we achieve economic growth and boost jobs when the Treasurer, in his budget speech, cannot mention China by name and instead makes allusions about a more dangerous world (read: China threat) and commits to ever more spending on our military?

This isn’t to deny that we live in a more perilous age or that an authoritarian China does not present a threat — or that we need to keep our defence force ready and equipped for any eventuality. But there are serious questions about how our political leaders are handling this hinge point of history.

China is an indispensable nation; our future depends on it. Our future depends on those other countries that make up half the world’s growth — countries we rarely even talk about.

This is not 1992. We have not just emerged from the Cold War; America is not the predominant or sole power in the world; this is not the end of history. We can no longer say, as Western political leaders did then, that China is on the wrong side of history.

The world is turning, history is turning

In its report The World in 2050, international professional services company PwC lists what will be the top 10 economies in the world:

1.China

2.India

3.US

4.Indonesia

5.Brazil

6.Russia

7.Mexico

8.Japan

9.Germany

10.UK

Where did the West go? The report says simply: today’s developing markets will be tomorrow’s economic superpowers.

Outside of the top 10, Vietnam, the Philippines and Nigeria will be the biggest movers in the rankings.

The report compares the E7 (emerging economies) with the G7. In 1995, the E7 were half the size of the G7; by 2015, the E7 had drawn level; by 2040, the E7 could be double the size of the G7.

A Rip Van Winkle “go to sleep and dream away the future” approach won’t work.

The West has been battered by war, growing inequality, stagnant wages, terrorism, economic collapse, declining democracy and rising political populism.

America — the so-called leader of the free world — is a country damaged by unending crisis.

President Joe Biden talks a good game about “America is back” and rebuilding alliances. But how does America lead a world where economic power has so dramatically shifted?

Betting against America

In his recent speech to Congress to mark the first 100 days of his presidency, Joe Biden said it was never a good idea to bet against America. But that’s precisely what many countries are doing.

China’s massive Belt and Road Initiative — one of the largest infrastructure and investment projects in history, covering 70 countries, 65 per cent of the world’s population and 40 per cent of gross domestic product — is a bet against America.

It is part of Xi’s China Dream of a rejuvenated nation, returned to the apex of global power.

Australia is caught in the crosshairs of this global historical turn. We are still a European outpost in Asia, a country with historical ties to Britain and all in with the US. 

It has served us well, but that world is passing. The geopolitical, economic and military plates are shifting as the world walks ever more treacherous fault lines.

But this isn’t the discussion we have been having post-budget.

Instead, we are talking about debt and deficit and vaccine rollout and possible election dates. Journalists are engaging in the usual round of predictable “gotcha” questions, and politicians are looking to score tit-for-tat political points.

All around us, the world we knew is giving way to the world we don’t truly understand, let alone are truly equipped for.

China, our biggest trading partner, is now a global Voldemort — he who cannot be named.

But call it what we will — or won’t — China looms over our world and it is dragging those other emerging economic giants along with it.

To stay with the movie analogy, for the West, there is no back to the future.


Source: ABC

EU trade chief proposes mutual tariff freeze to Washington

Brussels suggested the EU and its major overseas partner suspend tariffs imposed on billions of dollars of imports for six months, EU trade chief Valdis Dombrovskis told Germany’s main news platform, Der Spiegel.

The measure would go beyond the latest four-month suspension of import duties that the parties agreed in March.

“We have proposed suspending all mutual tariffs for six months in order to reach a negotiated solution. This would create a necessary breathing space for industries and workers on both sides of the Atlantic,” Dombrovskis said.

Last month, the two transatlantic partners agreed to suspend mutual tariffs that had covered $7.5 billion of EU imports of American goods and some $4 billion of US products shipped to the bloc. The freeze is set to expire in four months.

The bitter EU-US trade dispute over aerospace subsidies to plane makers Airbus and Boeing dates back to 2004. Then Washington challenged European subsidies of Airbus that reportedly had “adverse effects” on the US.

The EU filed a retaliatory complaint against the direct support given to Boeing in the form of regional tax breaks and government grants.

So far, tit-for-tat duties on various goods have affected nearly $50 billion in mutual trade. The list of EU products on which the US imposed taxes came in at $25 billion. $7.5 billion was authorized by the World Trade Organization (WTO). In comparison, the EU’s list totaled a mere $20 billion. WTO approved $3.99 billion.


US axes Trump-era Scotch whisky tariffs for four months in bid to resolve aircraft trade war with UK

The US said on Thursday it will suspend 25 percent tariffs on Scotch whisky and retaliatory import taxes on other UK products in a bid to resolve the two parties’ on-going transatlantic trade row due to aircraft subsidies.

Then-US President Donald Trump slapped the UK and other EU member states with tariffs on whisky, wine, cheese and other foodstuffs in 2019 in return for European plane maker Airbus being given illegal subsidies by the bloc. 

The World Trade Organization (WTO) ruled in 2018 that EU governments had failed to comply with US requests to stop funding Airbus, which had caused its American rival Boeing to lose $7.5 billion a year.

Airbus had already filed a similar complaint with the WTO against Boeing in a dispute between the two manufacturers stretching back to 2004.

On Thursday the US and the UK said in a joint statement that “the United States will now suspend retaliatory tariffs in the Airbus dispute from March 4, 2021, for four months.”

The move is the latest of Trump’s policies to be overturned by President Joe Biden, whose administration will now turn its focus toward rising civil aviation powers “such as China,” the statement says.

Reacting to the news, UK Prime Minister Boris Johnson hailed the tariff climbdown as “fantastic news” for the transatlantic trading relationship, as well as for Scotch whisky distillers and other businesses.

In December the UK International Trade Secretary Liz Truss announced Britain would suspend retaliatory tariffs against the US, ahead of Brexit and the expected new trading relationship with the US under Biden.

As well as whisky, Trump’s original tariffs in response to the WTO ruling targeted UK cashmere, German coffee and tools, Spanish olive oil, as well as cheese, meat and other products from various EU nations.

India’s China fears put to rest in Sri Lanka

Sri Lanka hands India major port development deal that will tie the two neighbors together for decades to come

By MK BHADRAKUMAR

In a stunning coincidence, a mere two weeks ahead of Indian Prime Minister Narendra Modi’s planned visit to neighboring Bangladesh, the Sri Lankan government on Monday issued a Letter of Intent to India’s Adani Ports and Special Economic Zones Ltd (APSEZ) to develop and operate the West Container Terminal (WCT) in Colombo. 

Sri Lanka’s Rajapaksa clan-led government took a calculated risk. If New Delhi were in Colombo’s shoes, it probably would have waited for another week. To make up its mind before formalizing the audacious decision to invite a big Indian presence. Right at the epicenter of the Sri Lankan dream to be “another Singapore.” 

For, in another week, Colombo would know which way the Indians actually voted in Geneva when the crunch time came on the US-sponsored resolution at the UN Human Rights Council regarding the alleged war crimes committed during the last brutally violent phase of the struggle to vanquish the rebel Liberation Tigers of Tamil Eelam (LTTE). 

Colombo has drawn New Delhi into a ring of long-term engagement that will be difficult to shake off easily. Indian high commissioner to Colombo has reportedly been touring the eastern and northern provinces of Sri Lanka to explain to the Tamil parties what is on the anvil in Geneva. 

What brilliant geopolitical “outsourcing!” Colombo expects that New Delhi will discourage Washington from undermining the stability of the island nation’s government. And to stop threatening to dispatch President Gotabaya Rajapaksa to The Hague. To meet the same tragic fate as Slobodan Milošević, the last president of the former Yugoslavia. Before it was carved up by the North Atlantic Treaty Organization (NATO) like a turkey on Thanksgiving Day.

Public Private Partnership

The WCT project envisages that APSEZ will partner with John Keells Holdings PLC. It is Sri Lanka’s largest diversified conglomerate, and the Sri Lanka Ports Authority as a part of the consortium with a 51% majority shareholding. It will be developed on a build, operate and transfer (BOT) basis for a period of 35 years as a public-private partnership. 

India’s biggest investment

The WCT will have a quay length of 1,400 meters and alongside depth of 20 meters. Thereby making it a prime transshipment cargo destination to handle ultra-large container ships. The project cost is estimated at US$750 million as of now, which may rise.

The WCT will become the single biggest economic project ever executed by an Indian company in the country’s immediate neighborhood. 

The huge significance of the WCT for the region’s economy cannot be minimized. An APSEZ statement highlighted that the project is expected to boost the WCT’s container handling capacity. And to further consolidate Sri Lanka’s locational advantage as one of the world’s top strategic nodes along the busiest global transshipment route.

The Port of Colombo is already the most preferred regional hub for transshipment of Indian containers and mainline ship operators. 45% of Colombo’s transshipment volumes is either originating from or destined to an Adani-run port terminal in India. 

Simply put, the Sri Lankan government is intertwining its economic prosperity with India’s massive market in an inseparable way. This takes the breath away. Particularly considering that it was only five years ago that New Delhi allegedly became messed up with an Anglo-American project to overthrow the established government in Colombo. It was, ironically, headed by the same leadership as today. 

India had teamed up with its Quad partner Japan originally to bid (unsuccessfully) for the East Container Terminal project at Colombo Port. There was much-suppressed fury when the Sri Lankan government spurned the offer. Indian strategic analysts thereupon went overboard with the stupid hypothesis that Colombo had buckled under “Chinese pressure.” 

Political stability

But now, the WCT, a much bigger BOT project, has been offered to India on a platter with no strings attached. Colombo seems to prefer that the Indians shake off their Quad ally and undertake the WCT on its own steam.

India is de facto becoming a stakeholder in the political stability of Sri Lanka. The bittersweet lesson of 2015 is that securing an easier, cost-effective, risk-free, predictable and durable outcome is possible with a pragmatic outlook and strategic patience.

No one in Delhi talks any more about the “China factor.” The paradox is that the WCT project will be adjacent to the massive Colombo Port project that Chinese companies are funding and executing.

Yet, apparently, there is no heartburn in Beijing either that the Adani Group is moving in as next-door neighbor.

Arguably, Beijing knew about the WCT project, which has been under discussion for a while. But in its ingenuity and wisdom, Beijing assessed that it is just as well if India’s paranoia about China’s presence in Sri Lanka is set at rest.

The WCT saga is unfolding just before Prime Minister Modi’s visit to Bangladesh planned for March 26-27. Bangladesh is another example where it emerges that India doesn’t need to carry a Quad visiting card to build a partnership. The Sri Lankan experience nonetheless has great relevance to Bangladesh.

World Bank Report

According to a new World Bank report titled “Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia,” seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17% in Bangladesh and 8% in India.

The report says a 297% increase in Bangladesh’s exports to India and a 172% increase in India’s exports to Bangladesh. It could be within reach if only transport connectivity improves between the two countries and they were to sign a free-trade agreement.

Nobody’s puppets

From the perspective of diplomacy and foreign policy, the bottom line is that the Indian strategic community should remain self-assured that the political elites in the SAARC (South Asian Association for Regional Cooperation) capitals surrounding India are not only nobody’s puppets but have always regarded New Delhi as their most important partner.

That, in turn, puts the onus on India to act with maturity and a sense of responsibility and decorum. 

Only with such a comfort level can India eschew its paranoia about the Chinese presence. It can instead focus single-mindedly on the pursuit of its business interests optimally in regional capitals. Ideally, leave it to the Adani Group to reset the India-Sri Lanka relationship and put it on a realistic, pragmatic footing.

As for the strategists and think-tankers in Delhi, do not suspend rational thinking after reading the garbage disseminated by US propaganda outfits from time to time expanding on the Central Intelligence Agency’s decade-old hypothesis about a Chinese “string of pearls” around India’s delicate neck. 

This article was produced in partnership by Indian Punchline and Globetrotter.

M K Bhadrakumar is a former Indian diplomat.

Iran wants to join Eurasian Economic Union

Will Russia allow it?

There are some good reasons for Moscow’s lukewarm response to the possibility of Tehran’s admission to the EAEU. What are factors for and against Iran joining Eurasian Economic Union from Russian point of view?

By NIKOLA MIKOVIC

The Russia-dominated Eurasian Economic Union might soon be acquiring a new member: Iran. Boxed in because of its rivalry with other states in the Middle East, and laboring under US-imposed sanctions, Tehran believes it needs to strengthen ties with such neighbors as might be willing to accept it.

Iran appears to think that membership in the EAEU is a done deal. That is despite officials of the bloc denying they had received any formal request. When Mohammad Baqer Qalibaf, Speaker of the Iranian parliament, visited Moscow on February 10, he declared Iran would “permanently join the EAEU in two weeks.” Apart from the fact that the date has passed, such optimism is extremely premature.

The response from Mikhail Myasnikovich, chairman of the board of the Eurasian Economic Commission, was telling. The Eurasian union wants Iran to have “a special view on cooperation with Eurasia,” he said. It hardly sounds like a warm welcome. Other EAEU officials have stressed that Iran must formally apply for membership. A veiled warning, perhaps, that Iran cannot expect to bypass procedures.

On the face of it, there are reasons for Tehran and Moscow to support Iran’s inclusion into the bloc. The economic area is an integrated market of 180 million people with a combined GDP of more than US$5 trillion. It encourages the free movement of goods and services and can formulate common policy in key areas such as energy, agriculture, transport, customs, and foreign trade and investment.

Iran already has had a free-trade agreement with the Eurasian union since 2018. In 2020, trade turnover between Iran and the EAEU increased by 2%, exceeding $2 billion.

Mutual benefits

Food products and agricultural raw materials accounted for most of that trade in both directions. 80% of the goods that the EAEU supplied to Iran and 68% of what Iran sent to the EAEU.

Joining the EAEU would improve Iran’s economic and political position globally and help to offset, at least partly, the cost of US sanctions.

On the Russian side, Moscow wants another pathway to the markets of the Middle East. That is why the Kremlin strongly supports the construction of the Nakhchivan corridor. It is a land route connecting not only Azerbaijan to its Nakhchivan exclave between Turkey and Armenia, but also Russia and Turkey and – crucially – Russia and Iran.

A future rail link between Russia and Iran, passing though Azerbaijan and Armenia, will undoubtedly enhance economic ties between the two countries as well as Iran’s trading relations with other Eurasian union member states.

However, how receptive Arab Middle East states would be to Russian goods transiting through Iran is another question altogether. This might be a reason for Moscow’s distinctly lukewarm response to the possibility of Tehran’s admission to the bloc.

In fact, there are several large questions hanging over inducting a new member into the bloc. Bloc consists of Armenia, Belarus, Kazakhstan and Kyrgyzstan, in addition to Russia. Uzbekistan, Moldova and Cuba have observer status.

Impact on Russian relationship with Israel and Arab States

It is not improbable that closer economic ties would lead to stronger military ones. The UN Security Council embargo on conventional arms shipments to Iran expired in October. It is no secret that Iran is interested in purchasing Russia’s S-400 anti-aircraft system. As well as Su-30 fighter jets. But such a deal would almost certainly ramp up tensions between Moscow and Washington and raise alarm bells in Gulf Arab states.

Then there is Russia’s relationship with Iran’s arch-enemy, Israel. The Russians have not prevented Israel from striking at Iranian targets in Syria, despite operating S-400 units in the area. Russia was the mediator in a prisoner exchange between its ally, Syria, and Israel that took place this month and there are rumors of further ongoing negotiations on humanitarian issues and even on wider geopolitical matters.

Speculation aside, what is known is that Israeli Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin discussed continued coordination between their two countries in light of developments in regional security. Was Iran also on the agenda?

Moscow, after all, must maintain its own delicate balancing act and guard its geopolitical interests. The normalization of ties between Israel and the United Arab Emirates and other Arab states has changed interest-dynamics in the region, tilting the balance further toward the Arab Gulf region’s anti-Iran alliance. How does Russia profit from the new Middle East?

Some other countries are already in the queue to join

Finally, there is the fact that there are others ahead of Iran in the queue to join the Eurasian union. Syria is one of them; 40 other countries also have stated their wish to develop trade and economic cooperation with the bloc.

As well as declaring that Iran would soon join the EAEU, Qalibaf said he had brought “a very important message” from Supreme Leader Ali Khamenei. It may well be that Moscow is composing its own, equally important message to send back to Tehran.

NIKOLA MIKOVIC

Nikola Mikovic is a political analyst in Serbia. His work focuses mostly on the foreign policies of Russia, Belarus and Ukraine, with special attention on energy and “pipeline politics.” 

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Race is on for Indonesia’s untapped rare earths

Tin mining tailings could contain commercial quantities of rare earths both US and China would be keen to tap

By JOHN MCBETH

JAKARTA – Rare earth, the experts like to say, is neither rare nor is it earth. But given its use in everything from smartphones to high-tech aerospace and defense systems, a potential buried treasure from the past may soon become the next big thing in Indonesian mining.

Indonesia appears to have only modest proven amounts of the v valuable minerals, but much of what it does have is locked away in the rock waste, or tailings, left over from centuries of tin mining on the islands of Bangka and Belitung, south of Singapore.

Although preliminary studies show state-owned PT Tambang Timah’s tin sands contain 13 of the 17 chemical elements in the periodic table present in rare earths, it will take further investigation to determine whether it is present in commercial quantities.

If it is, that would make Indonesia a player in an industry that is fast becoming a new trade war flashpoint between the United States and China because of its strategic significance for numerous civilian and military technologies, including both laser and precision-guided missiles.

China currently controls 80% of the world’s trade in rare earths and could conceivably  block US access in retaliation for any future Washington sanctions on Chinese-made goods.  

With proven reserves of 327,500 tons, Timah still produces about 30,000 tons of tin a year from an offshore-onshore concession covering 512,369 hectares; other private firms add 40,000 tons, making Indonesia the world’s largest tin producer. 

Rare earths also occur in Aceh, Jambi and Riau’s Singkep Island and in West Kalimantan, where they are associated with rich deposits of bauxite, the feedstock for a US$695 million alumina smelter the Chinese are building north of Pontianak, the province capital.

Historically, most rare earths have been produced as by-products from tin, copper and gold mining, but were not considered worth processing and have invariably ended up in stockpiles, as is the case with Tambang Timah.   

With the US distracted by internal problems, the only outside interest so far in Indonesia’s potential has inevitably come from China, which has 55 million tonnes of rare earth reserves, by far the largest in the world.

But in looking for investors elsewhere, such as the US and Australia, the government is anxious to develop domestic expertise in the complex seven-stage process of refining monazite and xenotime, the two minerals that house REE elements.

Where the US may have an edge over China is in handling radioactive thorium, which is released in the course of the processing and must be treated with extreme care, even if it doesn’t produce uranium’s dangerous gamma rays. 

Laboratory results indicate Timah’s tailings contain significant quantities of neodymium and praseodymium, which in combination with iron and boron are used to produce high-power magnets for electric motors and military guidance and control systems.

Indonesia already possesses 80% of the mineralsrare earths included, needed to manufacture lithium batteries, part of the government’s policy of venturing into electric vehicles as a way of creating a future industrial base built around its vast natural resources.

Neodymium is responsible for most rare earth demand, with a market value of $11.3 billion in 2017. Demand is currently outstripping supply by about 2-3,000 tons a year, but that gap will widen as more lithium battery-powered electric vehicles appear on the world’s roads.

Future prospects depend on the government enacting policy and regulation and in initiating incentives for downstream and upstream industry, according to Fadli Rahman, co-author of a 2014 Colorado School of Mines paper on Indonesia’s rare earth potential.

“If the Indonesian government remains passive and unassertive to the viable options, the rare earths will merely remain rare to Indonesians for the foreseeable future,” said Rahman, now state oil company Pertamina’s youngest commissioner.

With estimated reserves of only 13 million tons, the US is waking up to the fact that China’s domination of the increasingly strategic material leaves it vulnerable.

At one point, neodymium was even on the Donald Trump administration’s list of tariffs it placed on Chinese imports in 2018 before it was quietly removed, an indication of how important it has become to the US economy.

Last year, China threatened to strengthen controls on rare earth exports to the US, one of the reasons why Washington recently formalized an existing partnership with Australia to develop new sources of critical minerals, including rare earth, cobalt and tungsten.

Australia, with 2.1 million tons, is one of a handful of countries possessing significant rare earth reserves. Others include Brazil (22 million tons), Russia (19 million), Vietnam (11 million) and India (3.1 million).

Vietnam, whose rare earth concentrations are along its northwestern border with China and the South China Sea coast, is reportedly keen on using two relatively common elements, cerium and lanthanum, to develop a clean energy capacity.  

The US began mining rare earth at southern California’s Mountain Pass mine in the 1960s, but since 2010 China has become the dominant player, producing 100,000 tons a year compared with the US output of 43,000 tons over the past two decades. 

An open-pit mine close to the Nevada border known as Mountain Pass was recently saved from a second bankruptcy by MP Materials, a company owned by a Chicago hedge fund. It remains the only rare earth mining and processing facility in the US. 

Most rare earth projects have proven to be uneconomic because of mining costs which can contribute 25-39% of the total expenditure for extracting from hard rock deposits. But Bangka-Belitung’s Monazite has the advantage of being in sand form and therefore does not require crushing and grinding.

In the end, thorium and how to deal with it remains a major impediment to the development of monazite deposits.

Indonesian nuclear advocate Bob Effendi, the local representative for American nuclear reactor design company ThorCon, asserts that safety concerns around the stockpiling of the radioactive waste is a “non-issue.”

But local geologists say it will need to be contained in stainless steel casks and stored in reinforced concrete buildings, possibly on a small uninhabited island, until such time as it is needed as fuel for a long-planned nuclear power station.

For decades now, part of the International Atomic Energy Agency’s (IAEA) mission has been to simply monitor the volume of monazite in Tambang Timah’s tailings, as it has done with similar mine waste around the world. 

In the meantime, nuclear power remains on Indonesia’s agenda, initially set down in a 2007 long-term national development planning law that envisaged an operating plant by 2024. 

In 2014, the Ministry of Mines and Energy regulation listed nuclear in the same category as other sources of renewable energy, but with the proviso that it should only be considered as a final option.

A second ministerial regulation in 2019 called for the drawing up of a concrete plan for the construction of a nuclear power station, followed by a presidential regulation earlier this year which listed it as a priority program for advanced studies.

Bangka-Belitung governor Erzaldi Rosman Djohan sent a letter to the Coordinating Ministry of Maritime Resources and Investment on August 3 supporting the construction of the nuclear plant in the southern Sumatran province.

But the Indonesian citizenry may first have to get over their innate fear of nuclear power, which has so far stymied plans going back to the New Order era for a station to be built on the Muria Peninsula in heavily-populated Central Java.

A member of President Joko Widodo’s National Economic and Industry Committee (KEIN), Effendi argues that a thorium-fuelled plant is not only immune to meltdown but is cheaper to build and produces less waste.

The former oilman also challenges the widely-held perception that Indonesia has limitless sources of energy, noting that coal and gas reserves are not finite and claiming that solar and wind potential is only 15% of what it is claimed to be.

Indonesians are not alone in their fear of anything nuclear-related. In Malaysia, the government faces public opposition to the Lynas Corporation’s facility near Kuantan, which processes rare earth oxides shipped from its Mt Weld concentration plant in West Australia.

With more low-level radioactive waste piling up at the plant, and the issue heading for Malaysia’s High Court, Lynas has now been forced to move the cracking and leeching part of the process to the outback mining center of Kalgoorlie-Boulder.