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      Will Bolsonaro Leave Trumpism Behind to Embrace a Biden-led US?

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      Joe Biden’s victory in the US election is distressing news for Jair Bolsonaro, Brazil’s right-wing populist president who admires Donald Trump. Five days after the American media called the race in Biden’s favor, Bolsonaro was yet to congratulate the Democrat. Since Brazil became a democracy under the Sixth Republic in 1985, almost every Brazilian president has formally congratulated the American president-elect within 24 hours of the election. The exception was the 2000 US presidential race because of the Florida recount.

      The 2020 election is another exception. Oddly, Bolsonaro has kept a low profile on the topic. On November 4, he expressed support for Trump: “I think everyone has a preference, and I will not argue with anyone. You know my position, it’s clear, and that’s not interference. I have a good policy with Trump, I hope he will be re-elected. I hope.” Officials said that Brasilia was awaiting the US Supreme Court’s decision on the final vote tally before congratulating anyone — which Bolsonaro finally did yesterday, following Biden’s Electoral College win.

      The Biden-Bolsonaro equation matters because the United States and Brazil have had strong links for nearly two centuries. The US was the first country to recognize Brazil’s independence in 1822. During the period of the First Republic, from 1889 to 1930, the country’s official name was the Republic of the United States of Brazil. It imported a federal system of governance from the US and tried to associate with its northern counterpart.

      Brazil Rejects Bolsonaro’s Anti-Politics

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      The US-Brazil relationship goes back a long way and is deeper than ideological affinities between the two countries’ presidents. Until China overtook it in 2010, the US was Brazil’s biggest economic partner. A report by the United States Congressional Research Service on US-Brazil trade relations gives insight into American thinking. China’s investments in Latin America and the Caribbean from 2005 to 2019 amounted to $130 billion, with Brazil accounting for $60 billion and Peru for $27 billion. It is no surprise that the report states that there are “strategic and economic reasons for strengthening trade ties” with Brazil.

      In 2016, bilateral trade between Brazil and the US hit a low of $23.2 billion in exports and $23.8 billion in imports. In the first year of Bolsonaro’s presidency, exports reached $29.7 billion, a new high since 2008, and imports rose to $30.1 billion, the highest figure since 2014. In 2020, the COVID-19 pandemic, falling oil prices and restrictions on trade have led to a negative performance. Amcham Brasil, published by the American Chamber of Commerce, tells us that exports and imports have fallen by 25% this year as compared to 2019. The total trade figure from January to September was $33.4 billion, the lowest in 11 years.

      A Conservative Alliance

      When Biden enters the White House next January, Brazil may suffer a stronger fallout. Bolsonaro aligned very closely with Trump’s highly conservative, anti-globalization agenda. Brazil and the US will have to sort out their personal and strategic differences.

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      According to Cristina Pecequilo, author and professor of international relations at the Federal University of São Paulo, the personal bond between Bolsonaro and Trump will be difficult to let go of. Bolsonaro and his minister of international affairs, Ernesto Araujo, have aligned themselves with and have often emulated Trump. They repudiated multilateralism, undermined state actors and attacked intergovernmental organizations. Bolsonaro was critical of the World Health Organization and the United Nations in his speech at the UN General Assembly this year. He was appealing more to his anti-globalization voters back home than his audience at the UN.

      “There is this idea that Brazil and the US belong to the West and that they should be a unit. However, when we look north, it is clear that they historically understand it as themselves and Western Europe, what we call the ‘new transatlantic.’ Brazil is out of that equation,” Pecequilo told me in an interview.

      Araujo sees the world differently. He is a strong Trump supporter. In 2017, in an article titled “Trump and the West,” Araujo praised the US president, describing him as a crusader against communism, Islam and globalism. Araujo then reposted the text in his blog Metapolítica. In the minister’s view, “The United States was getting into the boat of western decay, surrendering to nihilism, by deidentifying itself, by deculturation, by replacing living history with abstract, absolute, unquestionable values. They were going into that, until Trump.” Last month, he deleted the post.

      Such words are unlikely to have gone down well with the Biden team. Therefore, Pecequilo believes that Araujo will have no option but to resign when all legal challenges to the US election result are exhausted.

      The Question of the Environment

      Apart from ideological differences, environmental and human rights issues will also present major challenges to US-Brazil relations. Joe Biden and Kamala Harris have both openly and repeatedly criticized Bolsonaro’s environmental policies and beliefs. On September 29, Biden even took the issue to the first presidential debate, saying that he “would be right now organizing the hemisphere and the world to provide $20 billion for the Amazon, for Brazil to no longer to burn the Amazon. And if it doesn’t stop, it would face significant economic consequences.”

      The statement generated an angry response from Bolsonaro, who characterized the comment as “regrettable, disastrous and gratuitous.” Ricardo Salles, Brazil’s environment minister, mocked the speech and questioned whether the amount would be an annual or a single transfer.

      Nevertheless, it is necessary to place Biden’s remarks in context, delivered by a candidate reaching out to the more progressive voter. Such rhetoric often comes up in a debate. Biden will behave differently when in the Oval Office. His policy will be more centrist. Gabriel Adam, professor at Brazil’s Superior School of Advertising and Marketing, says: “There will be pressure concerning the Amazon, but there will be no sanctions. Pressure shall come through diplomatic means, but at no time will it harm relations concretely. Brazil has more risks of damaging trade relations with the European Union.”

      Bolsonaro’s handling of the environment is a key element for Brazil’s relations with the European Union. In 2019, the EU and Mercosur, the South American trading bloc formed by Argentina, Brazil, Paraguay and Uruguay, announced an agreement to boost trade between the two continents. They agreed to eliminate import tariffs on more than 90% of the products. However, the ratification faces opposition by European civil groups and members of the European Parliament. Both criticize Brazil’s environmental policies. Last October, parliamentarians passed a non-binding resolution calling for changes in Mercosur countries’ environmental agenda to ratify the agreement. This is likely to hurt not only Brazil but also Mercosur’s other members.

      Historically, the US has not been a great advocate for the environment. Recently, this issue has been growing in importance. At the center of the recent discussion is the Green New Deal, the project conceived by Democratic Congresswoman Alexandria Ocasio-Cortez and Senator Ed Markley. Nevertheless, not even Biden and Harris seem to agree on a position on the subject. While Harris claims to support the plan, Biden says the Green New Deal is a “crucial framework” for his own platform but shies away from fully embracing the plan.

      Embed from Getty Images

      Biden’s climate plan is aggressive when compared to other American presidents. His first duty is to work domestically and demonstrate that the US is no longer a climate change denier. Internationally, the president-elect intends to “name and shame global climate outlaws” through “a new Global Climate Change Report to hold countries to account for meeting, or failing to meet, their Paris commitments and for other steps that promote or undermine global climate solutions.” Brazil is a candidate to be part of this ignominious group.

      Brazil faces international outrage over deforestation in the Amazon. It must also decide whether to strengthen the country’s environmental targets under the Paris Climate Agreement by the end of the year. This decision could improve or worsen Brazil’s image on the international arena. On November 4 this year, the US formally withdraw from its commitments under the Paris accords, but the Biden administration promises to rejoin on its first day in office. American action may push Brazil in the same direction, even if unwillingly.

      More Pragmatism, Less Ideology

      Like their American counterparts, many Brazilians value the US-Brazil relationship. In an interview with CNN Brazil, the Brazilian ambassador to Washington, Nestor Forster, said that a Biden victory would change in the relationship’s emphasis, not its essence. He stressed that he would seek to increase the Brazilian presence in discussions in the US Congress. 

      Some people in Bolsonaro’s government have shown signs that they understand that changes are about to take place in January 2021. Paulo Guedes, the minister for the economy, said that Biden’s eventual victory would not affect the country’s growth dynamics. An admirer of the Chicago School of minimal state intervention and free competition, Guedes declared that Brazil’s government would “dance with everyone.”

      While Bolsonaro’s silence on the US election and failure to recognize Biden as the president-elect has been widely criticized as hostile, the president, unlike his congressman son, Eduardo Bolsonaro, has not openly speculated about voter fraud. While the time it took the Brazilian president to recognize Biden’s win was damaging, it is unlikely to undermine a historic and extremely important relationship where strong mutual interests remain. Yet there are wrinkles to iron over. The Biden administration will not accept open hostility from Bolsonaro.

      Despite current ideological differences, common sense will prevail on the American side. Good relations with Brazil will help the US contain China in Latin America. Pecequilo believes that “Biden will keep his pragmatism. We will see localized tensions, but, structurally, Biden will not want to lose the advantages that Trump obtained in the Brazilian market.”

      It is Bolsonaro who faces a great dilemma. If Brazil’s ties with the US are further corroded by a blind belief in Trumpism and a lack of pragmatism, the South American giant will emerge as the major loser. As a superpower, it is easier for the US to find other partners and make Brazil a global pariah. Jair Bolsonaro’s choice will have significant consequences for Brazil.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      The Road Leading to the India-China Standoff

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      The reason for the China-India standoff in the Galwan Valley may not be the oft-mentioned construction of the Darbuk-Shyok-Daulat Beg Oldie (DSDBO) road. The new thoroughfare improved Indian logistics in the Ladakh area, meaning that supplies and troops can be deployed with far greater speed. While the DSDBO might have irked China, Beijing has deeper …
      Continue Reading “The Road Leading to the India-China Standoff”
      The post The Road Leading to the India-China Standoff appeared first on Fair Observer. More

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      in US Politics

      UK and US lock in behind Australia in China row

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      The British government has vowed to stand with Australia to “protect our key interests and values” and push back at “disinformation” amid a deepening rift in Canberra’s relationship with Beijing.The American ambassador to Australia also accused a Chinese foreign ministry official of spreading “disinformation through fabricated images and disingenuous statements” about Australia.The United Kingdom and the United States are the latest countries to speak out in support of Australia, after France and New Zealand criticised China over an official tweeting a digitally-created image depicting an Australian soldier cutting the throat of a child in Afghanistan.China has accused Australia of overreacting to the tweet and hyping the issue for domestic political purposes.When asked about the tweeted image, a spokesperson for the UK’s Foreign, Commonwealth and Development Office told the Guardian the foreign secretary, Dominic Raab, “has made clear we will always stand shoulder to shoulder with Australia to make sure that we protect our key interests and values”.“Disinformation is an issue we take extremely seriously and we will continue to coordinate closely with Australia and other international partners to ensure our citizens are protected,” the spokesperson said.The Guardian understands the British government believes that China, as a leading member of the international community, should live up to the obligations that come with that. It views the tweeted image as clearly fake and deeply concerning.When asked in the House of Commons last month about China’s escalating trade actions against Australia, Raab indicated he had regular exchanges with the Australian foreign minister, Marise Payne, and expressed “solidarity”.Raab said the UK was also working alongside Australia and the other Five Eyes partners – the US, Canada and New Zealand – on issues such as the crackdown on pro-democracy movements in Hong Kong.The US ambassador to Australia, Arthur Culvahouse, responded to questions from the Guardian by saying the Australian government had “responsibly investigated and disclosed allegations that its soldiers committed crimes in Afghanistan”.“The world can only wish that the Chinese Communist party were to bring the same degree of transparency and accountability to credible reports of atrocities against the Uighurs in Xinjiang,” Culvahouse, who was appointed by Donald Trump, said in an emailed statement on Wednesday.Those sentiments were backed by the US State Department’s deputy spokesperson, Cale Brown, who described the Afghanistan tweet as “a new low, even for the Chinese Communist party”.The CCP’s latest attack on Australia is another example of its unchecked use of disinformation and coercive diplomacy. Its hypocrisy is obvious to all. While it doctors images on @Twitter to attack other nations, the CCP prevents its own citizens from reading their posts.— Cale Brown (@StateDeputySPOX) December 2, 2020
      The Florida senator Marco Rubio wrote to the chief executive of Twitter, Jack Dorsey, to ask why the tweet had not been taken down. A Twitter spokesperson has previously said the image contained within the tweet had been “marked as sensitive media”, meaning it is hidden behind a warning message by default.On Tuesday, Scott Morrison turned to the popular Chinese social media platform WeChat to reach out to the Chinese Australian community.The prime minister sought to make clear that the escalating tensions between the two governments – which led last week to the imposition of hefty tariffs on Australian wine – were not a reflection on Chinese Australians.Morrison wrote that “the post of a false image of an Australian soldier does not diminish our respect for and appreciation of our Chinese Australian community or indeed our friendship with the people of China”.The prime minister said the “difficult issues” that had arisen in the Inspector-General of the Australian Defence Force’s report into alleged war crimes by special forces soldiers in Afghanistan were being dealt with in a “transparent and honest way”.Earlier this week, when he demanded an apology from the Chinese government over the tweet by Chinese foreign ministry spokesman Zhao Lijian, Morrison said the dispute was broader than just the two countries, and that other nations were watching.Zhao’s tweet seized on the findings of a recent report from a four-year official investigation into the conduct of Australian special forces soldiers in Afghanistan, known as the Brereton report.Another Chinese foreign ministry spokesperson, Hua Chunying, held up the front page of the Brereton report at Tuesday’s regular press briefing in Beijing as she declared that the “computer-generated graphic” was not a case of disinformation.“The Australian side … is under immense criticism and condemnation from the international community for the ruthless killing of Afghan innocents by some of its soldiers, but the Australian side wants to turn that into a tough-on-China position,” Hua said.The Chinese embassy in Canberra urged the Australian government to “face up to the crux of the current setback of bilateral relationship and take constructive practical steps to help bring it back to the right track”.“The rage and roar of some Australian politicians and media is nothing but misreading of and overreaction to Mr Zhao’s tweet,” an embassy spokesperson said.The former senior Australian foreign affairs official Richard Maude told the Guardian on Tuesday there was no end in sight to the rift in the relationship with Beijing, and it was a “pretty lonely and tough battle for a middle power to be in on its own”.“What we really need is enough countries to be willing to publicly take a stand,” Maude said.Australia and China have been at odds over a number of issues over the past few years, including the Turnbull government’s decision to exclude Chinese telcos Huawei and ZTE from Australia’s 5G network and its introduction of foreign interference laws that were seen as targeting China’s activities.But the relationship deteriorated sharply in April when the Morrison government issued an early call for an independent international inquiry into the origin and handling of Covid-19 and floated the idea of international weapons inspector-style powers for pandemic investigations.It triggered a furious reaction from Beijing, which has subsequently taken trade actions against a range of Australian exports including barley, red meat and wine, citing technical grounds. More

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      in World Politics

      Why Is Foreign Investment Flooding Into India?

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      For years, India suffered from what came to be called the “Hindu rate of growth” — a result of Jawaharlal Nehru’s policy choices. India’s first prime minister had a fascination for the Soviet Union and championed socialism. In India, this socialist economic model was incongruously implemented by a colonial bureaucracy with a penchant for red tape.

      Consequently, the license, quota and permit raj, a system in which bureaucrats commanded and controlled the Indian economy through byzantine regulations, throttled growth for decades. Once the Soviet model started collapsing in 1989, the Indian economy came under increasing pressure. A balance-of-payments crisis led to the 1991 economic reforms. Thereafter, India consistently grew at a rate of more than 5% per year until 2019.

      What Ails Corporate Governance in India?

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      During the COVID-19 pandemic, that growth has stalled. In the first quarter of India’s financial year that begins on April 1, the economy shrunk by a record 24%. Forecasts estimate that it will shrink further, although the rate of the contraction will decelerate considerably over the next two quarters. This contraction has left little elbow room for a government fixated on redistributive policies and fiscal restraint. This fixation is a hangover from the past.

      Historically, the Bharatiya Janata Party (BJP) has been more market-friendly than other political parties. In fact, the BJP broke new ground in the early 2000s by targeting and achieving a growth rate in excess of 8% when Atal Bihari Vajpayee was prime minister. Despite such high growth, the BJP lost the 2004 election. 

      Foreign Investment Hits Record Figures

      The BJP has not forgotten Vajpayee’s defeat. In particular, Prime Minister Narendra Modi has drawn a key lesson and focused on providing services to the masses. As a result, the government has focused on redistribution and taxation. It has put growth on a backburner. In 2018, the Modi government embarked upon what these authors termed Sanatan socialism, a policy that courts the poor with financial transfers and private provision of services. This strategy was vindicated by a resounding electoral victory in 2019.

      Today, COVID-19 is posing fresh challenges to the economy and to the Sanatan socialism policy. The growth slowdown in India is greater than in other emerging economies. The opposition has upped the ante and is blaming the government. Some business leaders are questioning the government’s lockdown strategy. This puts the BJP on the defensive regarding the economy.

      Yet even during such a growth shock, foreign direct investment (FDI) and foreign portfolio investment (FPI) have been pouring into India. Surprisingly, the FDI has hit record figures. In the first five months of this financial year, $35.7 billion has come into India. The FPI figures are also at an all-time high. In November, foreign investors plowed $6 billion into Indian capital markets, beating figures for Taiwan and South Korea. What is going on?

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      Three key facts explain this inflow. First, corporations from the US and the Gulf have bought big stakes in Reliance Industries, India’s biggest conglomerate. They are also buying shares in Indian companies. In effect, they are betting on future growth.

      Second, the Performance Linked Incentive (PLI) scheme has gained some traction. The purpose of the PLI is to boost electronic manufacturing in the country. So far, India has been too dependent on China. Current tensions along the border have led India to change tack and give financial incentives to companies who manufacture in-house. Players like Samsung, Pegatron, Foxconn, Wistron and AT&S have responded well to the PLI.

      Third, global corporations might be diversifying their supply chains to mitigate the risk of manufacturing exclusively or mainly in China. This strategy to tap alternative supply chains to China is widely known as China Plus One, and India might be benefiting from it.

      Modi has doubled down on an advantageous situation. Sovereign wealth funds, pension funds and organizations with over $6 trillion of assets under management attended a summit organized by the prime minister in the first week of November. In addition to Modi, India’s business leaders such as Mukesh Ambani of Reliance Industries Limited, Ratan Tata of the Tata Group and Deepak Parekh of Housing Development Finance Corporation pitched to these investors. More foreign investment might follow soon.

      What Lies Ahead?

      If investment is flowing in, what are its implications for the Indian economy? First, India will experience a growth spurt within three to four quarters from now. In recent years, private investment has been weak because of a banking crisis. Indian banks lent large sums to big borrowers who had no intention or ability to pay back their debts. This meant that they had no money or appetite to lend to bona fide businesses. A credit crunch ensued, investment suffered and so did growth. Increased FDI will reverse this trend and fuel growth by restoring investment.

      Second, India will experience job growth thanks to higher FDI. The entrance of new players and the revitalization of older ones will increase employment. The government has already instituted major labor market reforms to encourage manufacturing and other labor-intensive activities. 

      Third, increased employment could boost domestic demand, raising growth rates. These might materialize by the 2022-23 financial year, just in time for the next general election. The FDI flowing in right now might be boosting the BJP’s 2024 reelection chances.

      Finally, the record FDI is giving the Modi administration a leeway to achieve geopolitical goals. With cash coming in from friendly economies, the government is limiting economic engagement with nations hostile to India, especially in core sectors such as power, telecommunications and roads. Aimed largely at Chinese and probably Turkish entities, the move could benefit European, American and East Asian companies from Japan, South Korea and Taiwan.

      India’s new economic direction reflects the seismic shift in the global economy. The post-1991 era is over. As during the Cold War, countries are now mixing politics and business again.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      In Asia, a New Kid on the Trade Bloc

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      History undergoes serious change thanks in particular to slow events that fly below the media’s radar. Focusing on dramatic, immediate events, the media tends to neglect the major shifts that unfold over time. Paradoxically, slowly developing events that often go unreported tell the true story of history. Most often, the exciting, explosive events that dominate the news merely serve to accelerate longer-term trends.

      There is a simple scientific reason for this. Systems react immediately to dramatic events that occur quickly and unexpectedly. They typically mobilize their defenses to improvise a rapid reply. Rather than signaling change, such actions serve to protect and reinforce the status quo.

      The 9/11 attacks, clearly the most dramatic event of the past two decades, provoked a massive response from the US government. The effort to oppose the emergence of the new shape of terrorism appeared to mark a decisive shift in contemporary political history. The response consisted of a global military alliance intent on defending the prevailing “rule of law” and the elaboration of a powerful security state.

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      The effort piloted by George W. Bush and Tony Blair ended up simply reinforcing the focus of Western nuclear powers on the idea that sophisticated military technology provided the key for governing the world. It confirmed and consolidated the long-term trend of building the entire Western economy and culture around the American military-industrial complex.

      Distracted by a relatively meaningless transfer of power in the US following Joe Biden’s election and other colorful events such as the comic melodrama of relations within British Prime Minister Boris Johnson’s chaotic Brexit team, today’s media have paid scant attention to one event of monumental importance that took place on Sunday. The event itself was unremarkable, but it is a powerful indicator of historical change. The signing on Sunday of the act that brought Asia’s Regional Comprehensive Economic Partnership (RCEP) into existence marked a crucial moment in a slowly evolving shift that began nearly a decade ago and will have a profound impact on history in the coming years.

      In its article on the event, Al Jazeera quotes one American expert, Jeffrey Wilson, who sees RCEP as “a much-needed platform for the Indo-Pacific’s post-COVID recovery.”

      Today’s Daily Devil’s Dictionary definition:

      Post-COVID recovery:

      The idea which some people consider to be phantasy that the global economy may some day return to normal once COVID-19 is eradicated.

      Contextual Note

      The New York Times notes that RCEP has been in the plans for eight years and describes it as “designed by Beijing partly as a counterweight to American influence in the region.” In other words, this is a chapter of a story that lives within the context of a massive and continual decades-long shift of momentum in the global economy. The center of gravity of the global economy has been silently but steadily migrating from the North Atlantic following World War II on a south-eastward course toward Asia.

      Back in 2015, Reuters market analyst John Kemp pointed to the West’s failure to sense this movement, stating that “Most western policymakers and journalists view the world economy through a framework that is 10-15 years out of date.” He further points out that “India’s economy has also started to become a major source of global growth, which will ensure the centre of gravity continues to move more deeply into Asia over the next 50 years.” Analysts who have even attempted to assess the speed of the shift appear to agree on a “rate of about 100 kilometres or more per year.” It may have accelerated since 2015, and even intensified as a consequence of the implicit isolationism of Trump’s “America First” philosophy.

      Embed from Getty Images

      Fearful of the threat to US hegemony posed by the RCEP, the Obama administration launched the Trans-Pacific Partnership (TPP), designed to eclipse the RCEP and protect some of the key historical advantages that underpinned US economic hegemony. Once Trump decided to leave the TPP, the US could no longer take advantage of its provisions to protect industrial property rights or oblige other nations to respect unified labor standards.

      The US has literally been left behind in the race to define and enforce the rules that will govern commerce and economic development throughout the Asia zone over the next 50 years. Most commentators suspect that once president-elect Joe Biden is in office, he will not in the short term make an effort to catch up. In the midst of a complex health and economic crisis, there are other priorities. But Jeffrey Wilson’s comment about “Indo-Pacific’s post-COVID recovery” reveals that Asia, under China’s leadership, today has a clear head start and can set the tone for what a post-coronavirus world will look like. This is a question every nation is grappling with. There are no obvious answers. But there can be little doubt that the world that emerges once COVID-19 is completely under control or eradicated will be very different from what preceded the pandemic.

      The Times signals the fact that “to some trade experts, the signing of the R.C.E.P. shows that the rest of the world will not wait around for the United States.” Many commentators have noted that four years of Donald Trump have convinced European leaders that depending on the ideological and geopolitical framework provided by the US is too risky an engagement. It may even transpire that, despite the intensified military cooperation between India and the US directed against the Chinese threat, as reported in this column by Vikram Sood, Atul Singh and Manu Sharma, India could eventually be attracted to the RCEP. Security is one thing. A humming economy is another.

      India could, for example, be positioned to profit from a key feature of RCEP. The Times quotes Mary Lovely, a senior fellow at the Peterson Institute for International Economics in Washington, who notes that “R.C.E.P. gives foreign companies enhanced flexibility in navigating between the two giants. Lower tariffs within the region increase the value of operating within the Asian region, while the uniform rules of origin make it easier to pull production away from the Chinese mainland while retaining that access.” Narendra Modi’s India has not yet managed to fulfill its promises to expand manufacturing in India. Could RCEP be the key to providing conditions favorable to that evolution?

      In short, the world is faced with a formidable number of variables that combine in a variety of different ways. As Brexit demonstrated, today’s political alignments can be nullified in a trice as the perception of economic opportunities and the pressure of uncontrollable crises such as the COVID-19 pandemic lead to new geopolitical configurations. Those trends are far more powerful than bilateral agreements.

      Historical Note

      Asia’s Regional Comprehensive Economic Partnership will only begin to produce practical effects two or three years down the line. But it already opens channels of communication and coordination between fifteen countries. This will not only confirm the shift of the global economy’s center of gravity but also accelerate the shift toward a new power relationship between the US and China. As the recent presidential campaign highlighted, Americans tend to see this as a binary relationship. Yet all the indicators point toward a multipolar reordering.

      The Times article reminds readers of the historical situation when RCEP was first proposed: “The prospect of China’s forging closer economic ties with its neighbors has prompted concern in Washington. President Barack Obama’s response was the T.P.P.” Trump’s action upon taking office of killing the TPP before it could be signed opened the door to the eventual 15 nation agreement, with the roles of the US and China inverted. Obama designed the TPP to allow China in through the back door. RCEP is designed to allow the US in through the back door.

      The world awaits the evolution and hoped-for denouement of a series of crises nested each within the other. However painful and disruptive, these crises have the merit of signaling the existence of a common interest for all of humanity in stark contrast with the traditional model of geopolitical reasoning based on national rivalries. It is in everyone’s interest to keep our eyes fixed on the slow but deep movements of history as well as the superficial ones that the media throw in our faces every day.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      US blocking selection of Ngozi Okonjo-Iweala to be next head of WTO

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      The US is blocking the appointment of Ngozi Okonjo-Iweala as the next head of the World Trade Organization despite the former finance minister of Nigeria winning the overwhelming backing of the WTO’s 164 members, it has emerged.
      Dr Okonjo-Iweala had moved a step closer to becoming the first woman and the first African to be director of the global trade watchdog after securing the support of a key group of trade ambassadors in Geneva. Soundings taken by a selection panel of three WTO trade ministers found she had far more support than her South Korean rival, Yoo Myung-hee.
      Sources said Okonjo-Iweala was backed by countries in the Caribbean, Africa, the European Union, China, Japan and Australia.
      However, her candidacy failed to win the support of Washington, which raised last-minute objections to the process by which the new director general was being picked. An original list of eight candidates, which included the former Britishinternational trade secretary Liam Fox, has been whittled down to a final two since the summer.
      By tradition, the WTO chooses its director general by consensus, with all 164 members having to approve a candidate. The US has been unhappy with the way the WTO has operated for some time, objecting to China’s designation as a developing country and blocking the appointment of new judges to the organisation’s appeals body.
      Sources said it was unclear whether Washington’s opposition to Okonjo-Iweala was a deliberate attempt to sabotage an organisation much criticised by Donald Trump.
      A WTO spokesman said her candidacy would be put to a meeting of the body’s governing general council on 9 November, adding that there was likely to be “frenzied activity” in the meantime to secure consensus.
      In the event that Washington maintains it will not support Okonjo-Iweala, the WTO’s constitution does eventually provide for a vote, although every previous director general in the organisation’s 25-year history has been appointed by consensus, and trade experts said life would be difficult if an appointment was made against the wishes of the US.
      [embedded content]
      Sources in Geneva said it was possible the US position may be affected by the result of next week’s presidential election, which Joe Biden is currently expected to win.
      A spokesperson for Okonjo-Iweala said: “Dr Ngozi is immensely humbled to receive the backing of the WTO’s selection committee today.
      “Dr Ngozi looks forward to the general council on 9 November when the committee will recommend her appointment as director-general. A swift conclusion to the process will allow members to begin work together, on the urgent challenges and priorities.” More

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      in World Politics

      Will Laos Become a Model for China’s Economic Colonialism?

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      The small Southeast Asian nation of Laos stands out as a success story in COVID-19 control. With only 23 confirmed cases, it has gradually lifted lockdown measures. Success on the medical front, however, will not be enough to carry the country through the economic whiplash that pandemic containment had on the informal economy. Laos’ reliance on remittances from abroad is not unique in the region, and while it has thus far averted a coronavirus-induced health crisis, its economy is expected to contract, according to World Bank estimates.

      Incomes from tourism, remittances and the informal gig economy are expected to be hit hardest by the pandemic. Director general of the Laotian Department of Labor Skill Development at the Ministry of Labor and Social Welfare, Anousone Khamsingsavath, has voiced concerns about exacerbated poverty under COVID-19. Migrant workers have been returning from abroad due to evaporated opportunities, and the sudden influx of job seekers, coupled with a precarious economy, makes countries like Laos particularly susceptible to economic — and thus political — influence from outside.

      With the BRI, China Still Has a Long Road Ahead

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      Against the backdrop of the pandemic, countries whose economies are large enough to weather the storm have a unique opportunity to extend their influence vis-à-vis their smaller neighbors. A case in point: China and Laos. Earlier this year, Beijing began to build diplomatic goodwill in Vientiane by sending supplies, health advisers and medical staff, as well as offering loans and development opportunities to help Laos recover from the crisis. Existing power imbalances between the two states will likely be exacerbated, and China is well positioned to further consolidate support for its ally.

      Golden City

      China was the first country to be hit by the pandemic, and its economy, the second largest in the world, is now showing signs of recovery. Beijing has already unveiled a 3.6-trillion yuan ($506-billion) stimulus package, suggesting that China intends to continue work on its existing projects, with the Belt and Road Initiative being the crown jewel among them. As part of this initiative unveiled in 2013, China has been working to extend its land and maritime transportation networks through infrastructure built with the agreement of partner countries.

      One of the initiative’s branches that has thus far received little attention is the China-Laos railway, which stretches from Mohan, in China’s Yunnan province, to the Laotian border town of Boten, before reaching the capital, Vientiane. Once adjoining railways are complete, the segment is projected to be part of a pan-Asian network that joins Yunnan’s capital Kunming with Bangkok, Kuala Lumpur and Singapore. The project has been underway since 2016. Laos is the only landlocked country in Southeast Asia, and due to the lack of ports that can offer counterbalancing sources of income and connectivity, it is particularly dependent on Chinese investment in towns like Boten. The town was designated a special economic zone (SEZ), its casinos drawing in massive numbers of tourists from mainland China, where gambling is illegal.

      Embed from Getty Images

      Touted by both governments as a partnership of mutual prosperity, local Laotians complained of the disrespect and one-sided decision-making from the new arrivals. This was the case when casinos in Boten were shut down in 2010 by the Chinese Ministry of Foreign Affairs over accusations of crime and prostitution. The town, whose economy centered around gambling, went into decline even as construction of the railroad continued. Two years later, however, Laotian officials decided to give the original sponsor of Boten’s failed project a second chance. The sponsor partnered with another industrial group and signed a new agreement to shift the town’s focus from gambling to commerce, rechristening “Golden Boten City” as “Beautiful Boten Specific Economic Zone.”

      It is unclear whether this new venture is a result of or is intended as an extension of the railway being constructed. What is clear is that China does not intend for the BRI to be an isolated transportation framework in Boten’s case. Railway construction naturally brings an influx of Chinese laborers who prefer Chinese goods and Chinese services, but an injection of Chinese cash into the local economy could also add to the local government’s incentive to cooperate with construction. The businesses and the railway can then form an economic feedback loop that justifies each other’s existence.

      Business Model

      This business model would not be so worrying if the local Laotian government retained significant regulatory power over the venture. However, the Chinese-funded Boten Economic Zone Development and Construction Group has been given the responsibility of charging taxes and building both utility and telecommunications infrastructure. This calls into question the sovereignty of the host nation’s government, and one of the group’s buyers stationed in Boten went so far as to say the company basically controlled the entire growing city.

      SEZs like Boten may become the next model of economic colonialism in Southeast Asia, where Chinese investors lease large tracts of land for a substantial period, import Chinese workers to build infrastructure around railway stations, and create economies that cater specifically to Chinese patrons and Chinese interests. This form of colonialism doesn’t have to be directly affiliated with the Communist Party, as China has more than enough corporations with deep pockets that can withstand the risk of investment and provide the much-needed capital to rural areas whose native government do not have the means for development.

      As COVID-19 ripples through Southeast Asia, countries in the region can be expected increasingly to look abroad for any kind of financial buffer that will help them survive the economic shockwaves. Even countries like Laos that have avoided a health crisis cannot avoid suffering indirectly from the economic contractions of their less proactive neighbors. Regional governments will be tempted to grant more concessions in the hopes of bringing more jobs to locals out of work, and capital from China will be alluring, even as it inevitably comes with economic dependence and the local influence of powerful Chinese corporations.

      Developments in little-known outposts with potential, such as Boten, rarely make the headlines. But make no mistake: China was already making its way steadily through Southeast Asia, and the ongoing pandemic is only likely to increase its pace.

      *[Fair Observer is a media partner of the Young Professionals in Foreign Policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      What Turkey Stands to Gain From Its Natural Gas Discovery

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      Turkey’s first natural gas discovery was undoubtedly breaking news. As the world focused its attention on the escalation between Ankara and Athens in the eastern Mediterranean over natural resources and maritime borders, President Recep Tayyip Erdogan made the announcement on August 21 that marked the end of Turkey’s unsuccessful quest for indigenous oil and gas. If confirmed, the discovery of a 320-billion-cubic-meter natural gas deposit off Turkey’s Black Sea coast will enhance the country’s energy security and could help shape Ankara’s foreign policy trajectory.

      For years, Turkey has been tirelessly looking for oil and gas. To do so, Ankara mainly relied on the expertise of foreign companies. Encouraged by the recent discoveries of significant gas fields in the eastern Mediterranean, Ankara stepped up its efforts in the region as well as the Black Sea. This time, however, the state-owned Turkish Petroleum Corporation (TPAO) decided to explore opportunities on its own. As a result, TPAO purchased three drilling ships — Fatih, Yavuz and Kanuni, all named after Ottoman sultans — between 2017 and 2020, and deployed them in both the eastern Mediterranean and the Black Sea. The plan worked: Fatih was instrumental in making the August discovery.

      Discovery of Natural Gas Exposes Turkey’s Political Rifts

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      The finding could alleviate Turkey’s energy import options and equip Ankara with a powerful bargaining chip in negotiations with traditional suppliers. It could also help to transform TPAO into a significant player in the industry. The petroleum company has already made strides in this regard. During the last several years, the TPAO has intensified its efforts in oil and gas exploration and production.

      The company has also taken advantage of rapprochement between Ankara and the UN-recognized Libyan government in Tripoli in order to resume projects halted in 2014. Back then, the TPAO announced the successful completion of wells in Sirte and Sebha. In April, partnered with Russian Zarubezhneft, TPAO signed preliminary deals to participate in its upstream sector and has made strides in Algeria by signing up to an onshore project together with Sonatrach and Zarubezhneft. Furthermore, Turkish authorities have been vocal about their intentions to invest in Somalia’s and Ethiopia’s oil and gas sectors.

      Given the complexity of deep-water drilling, TPAO’s inexperience when it comes to offshore projects and the costliness of such endeavors, the development of the Black Sea fields may require partnerships with more experienced companies. Turkish authorities have already mulled over a potential collaboration with Russian and Iranian companies, but it seems less likely given the state of Ankara’s relations with both countries. Ankara has diverging interests with Tehran and Moscow in Syria and is also trying to reduce dependence on both Russian and Iranian gas supplies. Therefore, Turkey will likely be reluctant to add another dimension to this complex web of relations by inviting a Russian or Iranian company to the project. It is more likely for Turkish companies to partner with companies from friendly states with experience developing such complex and costly projects.

      TPAO has already partnered with the State Oil Company of the Azerbaijan Republic (SOCAR) in upstream projects in the Caspian Sea. Given the fraternal relations between the two countries, which have only solidified in light of the recent fighting between Armenia and Azerbaijan over the disputed Nagorno-Karabakh region, SOCAR’s engagement in the project is not excluded. Ankara’s unequivocal support for Baku in the conflict with Armenia and Azerbaijan’s increasingly growing share in natural gas supplies to Turkey could be easily translated into cooperation in the oil and gas sector as well.  

      TPAO may also partner with Qatar Petroleum, which has extensive experience in managing such complex deep-water projects. Turkish authorities have already suggested such a possibility. In March, Turkish Foreign Affairs Minister Mevlut Cavusoglu stated that Ankara is considering a partnership with Malaysian, British and Qatari companies in the eastern Mediterranean. Qatar Petroleum has decades of experience in operating the North Dome, the largest natural gas field in the world. Turkey and Qatar may use the opportunity to capitalize on their political relations and channel the geopolitical alignment into cooperation in the business sector.

      If the findings are confirmed, aside from providing a strategic advantage in the energy sector, the deposits will be a crucial element in bolstering Turkey’s foreign policy efforts, such as the Blue Homeland strategy and the pivot to the Maghreb and the Sahel. TPAO’s recent expansion abroad, especially in Africa, indicates the prerogatives of Ankara’s foreign policy goals. Turkey already faces strong opposition from almost all eastern Mediterranean littoral states that have collectively aligned to resist Ankara’s endeavors. To cope with these challenges, Turkey will need to build geopolitical alliances and economic partnerships of its own.

      *[Fair Observer is a media partner of Gulf State Analytics.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More