The Arkin Group

March 23, 2023

Little of real substance emerged from the meeting from Xi and Putin other than platitudes about their enduring special relationship. Riding high from the Chinese brokered peace deal between Saudi Arabia and Iran, Xi was able to have yet another photo op brandishing his proposed peace deal between Russian and Ukraine. While the Saudi-Iranian deal is full of promise but short on details, this deal is a non-starter and Xi shows little interest in pushing Putin to get to a real place for meaningful negotiations with Kyiv.

While China speaks of its desire for peace, what Xi is most interested in is projecting to the world (especially the Global South) the emergence of new Chinese global leadership free from what he would term the shackles of the West’s hegemonic influence. Xi is offering a new sort of alliance to many of the world’s leading oil and gas purveyors – Iran, Russia, Saudi Arabia, Iran – that offers a bolstered market for their oil and gas but also an alternative world order. But what that really means is a world free from international norms for territorial sovereignty, human rights, and political freedom, free from pesty regulations of transparency and accountability, free from the rule of law, free from much of the international order that keeps the global economy functioning and has on balance ushered the greatest period of political stability that the world has ever known.

It is a curious gamble that Xi is coming out so boldly on this regressive, petrochemical-heavy vision for the world economy when the imperative posed by climate change and water shortages (underscored by the UN Water Conference being held this week) require alternative energies and technologies and a reinforced global cooperation that can only take place within the framework of an international order. It is possible that there is more bluster and posturing behind these efforts than real enduring power. Xi has real domestic challenges whether it be his flailing housing sector to an existential demographic crisis of population decline. His efforts may have a shorter horizon to shore up cheaper energy to help subsidize an economic recovery and to make marginalized leaders in Moscow, Tehran and Riyadh more beholden to him.

Still, there’s strong reason to believe that many of the Global South are taken in by these grand gestures buttressed by a decade’s long investment-cum-diplomatic campaign in Belt and Road. It is a critical time for the West to realize both the strategic import of this part of the world and the strategic opportunity to make an alternative, sustainable case for international cooperation opposed to what is essentially long-term fealty to an autocratic and ruthless Beijing regime.

March 17, 2023

Emboldened by an unprecedented third term, Chinese President Xi’s ambitions are inciting many firsts. In a meeting with members of the Chinese private sector in early March, President Xi accused Washington of enacting a policy of “containment” towards China- a term fraught with negative historic connotation and economic implications. This inaccurate, binary description of the relationship supports Xi’s recently announced vision of a new world order, “the global civilization initiative”, which unsurprisingly seeks to put China at the helm and minimize Washington. But Xi’s attempts to reinvent Chinese foreign policy and capitalize on the global uncertainty stemming from the Russian invasion of Ukraine are not going unchallenged.

It’s also increasingly clear that China’s demands as the world’s second largest economy are what’s informing its new geopolitical strategy. Last Friday, China brokered a historic deal between Iran and Saudi Arabia. It’s unusual for Beijing to step into the role of global mediator, but China is now Saudi Arabia’s top trading partner, and regional stability in the Gulf has assumed new significance. With its great energy dependence and appetite, China can’t afford unstable suppliers, and we can anticipate Beijing to again take up the role of global statesman in other regions where its economic interests are at stake.

It’s also in Russia’s interest to have a stable Gulf as its economic relations and weapons-dependence on Iran have increased over the course of its Ukraine invasion. But as Russia continues to attack Ukraine with no discernable end in sight, China might be angling to serve as a mediator between the battling nations. There are economic implications here as well- China’s trade with Russia hit a record high of $190 billion last year. Riding his success as a Gulf negotiator, Xi is anticipated to travel to Russia as soon as next week and he’s expected to have a phone call with Ukrainian President Zelenskyy after the visit. This would reportedly be the first conversation that the two leaders have had since the onset of the war.

But just as Xi has been establishing political alliances in its effort to take the global lead, Chinese efforts have incited the need for stronger alliances among its adversaries. On Thursday, Japan and South Korea met in Tokyo for their first summit in over a decade. Hours before the meeting, North Korea expressed itself by launching a long-range missile that landed in waters west of Japan. The threat from China and North Korea has necessitated that Japan and South Korea overcome their historic disputes and rebuild their economic and security relations; further developments here are anticipated.

In addition, the Australia-United Kingdom-United States “AUKUS” security pact, founded in fall 2021, is advancing its efforts to increase security in the Indo-Pacific region. This week, the trio announced that Australia will be getting its first nuclear-powered submarines, a least three of them from the United States. The issue of owning a nuclear-powered fleet has been contentious in Australia, which is committed to being a nuclear-free country. President Biden was quick to stress that the subs would be nuclear-powered, not nuclear armed, but it’s the Chinese who appear most miffed.

The subs will grant Australia with the ability to travel farther and more quickly, and potentially carry out long-range strikes as needed. The nuclear fleet underscores the imperative for regional security and the threat imparted by Beijing. While Washington’s previous efforts on Asian security were primarily in the form of bilateral agreements, there is now an incentive to empower independent interactions among regional allies. But it’s murky territory, as by now many regional players like Australia have strong trade relationships with China, and it’s unclear if Beijing will seek to economically punish them for upping their physical defense.

March 9, 2023

Recent events demonstrate that post-Soviet states are wary of fully aligning with Putin. Russia’s invasion of Ukraine has had a widespread impact on global food, energy, and geopolitics, but it’s also directly impacted the stature and political strategy of Russia’s post-Soviet neighbors. These countries are now grappling with how to navigate and reshape their historic, political, and economic ties to Russia given the increasingly threatening and unstable regional operating environment. Some countries have decided to fully turn their back on Putin, while others are striving to balance the demands and needs of multiple global powers to their strategic advantage.

The struggle was visible this week in Tbilisi, Georgia where citizens took to the streets to protest a new Putin-esque legislative proposal. The proposed bill would have required Georgian organizations to register as “foreign agents” if they received more than 20% of their funding from abroad. The bill smacks of similar legislation that’s been active for years in Russia to curb internal dissent. Fortunately, the Georgian government responded to the sizable opposition of its citizens, and advice from EU leaders, and announced on Thursday that it will be dropping the proposed bill.

One of the primary concerns of the bill, in addition to the anti-democratic implications of such legislation, comes from Western-facing Georgians who want to join the European Union. To do so, Georgia can’t be viewed as a corrupt, authoritarian state operating under Putin’s shadow. Likewise, over the past few years, Moldova’s President Sandu has been leading her nation on a track to EU membership. But it’s complicated, because there are influential factions of society within these post-Soviet states that are still more inclined to side with Russia. What’s notable right now, however, is that other post-Soviet nations that aren’t even vying to be closer to the EU or NATO still don’t want to fully align with Putin.

Indeed, conditions have shifted for Central Asian countries that have previously relied heavily on Russia for security and economic opportunities. Russia can’t be everywhere at once, and its military presence in Central Asia has declined over the past year. Further, many of these nations physically move their goods through Russia and are nervous about the continued impact of sanctions on their exports. Central Asian leaders have also noted Putin’s diminished role as a regional mediator. At the Munich Security Council meeting a few weeks ago, it was US Secretary of State Antony Blinken who met on the sidelines with the Armenian and Azerbaijani leaders to discuss peace prospects for the Nagorno-Karabakh conflict. Previously, Putin brokered the most recent peace deal.

In the Nagorno-Karabakh conflict, and in other areas of regional strife, Washington is presenting itself as a partner, not necessarily a mediator. This is a strategic play, because picking sides between Washington and Moscow is a risky proposition for many post-Soviet states who are more inclined to seek balanced relations between major powers. Further complicating their strategies, Central Asian countries also need to carefully manage their relations with Beijing. Balancing the needs and impact of these global heavyweights is going to be important for the economic and physical security of Central Asian states moving forward, and they don’t want to put all of their eggs in Putin’s basket.

Indeed, Russia’s Ukraine invasion has disrupted the paradigm and the United States has a chance to play an increased role as a partner in the region. This opportunity, while not a clear win for Washington, is still a loss for Putin who has been trying to exclusively dominate the area for decades. Just less than two weeks ago, Secretary Blinken visited Kazakhstan and Uzbekistan and attended the first ministerial-level engagement in the region of the C5+1 Diplomatic Platform – including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, since 2015. Blinken’s visit signals a change in how Washington is approaching the region. Instead of focusing on how these states can help US efforts in Afghanistan, the focus will now be on empowering these nations to avoid being coopted by aggressive neighbors.

A View from Abroad

Once a month, In Other News features a short op-ed heavily informed by the European perspective. We hope that these special monthly pieces will offer our readers an enriched understanding of global events and allow for a more robust international risk calculus.

The German-French relationship is still the beating heart of the European Union and it needs to stay healthy. In late January, 60 years after France and West Germany signed the Treaty at the Élysée, French and German heads of state again met in Paris to reconfirm their bilateral friendship. It’s more critical than ever that French President Macron and German Chancellor Scholz overlook their rocky start and present a united front against Russian aggression. The French-German relationship generally propels the EU, but since Brexit in 2020, this relationship has become even more important. When Germany and France are in alignment, the entire EU profits. But when they diverge, it threatens to grind the EU to a halt. Right now, there’s too much at stake for the EU to be anything less than fully functional.

Germany is the largest European country in terms of landmass, population, economy, and budget, but it sometimes appears to lack the self-confidence of France. Traditionally, within the EU, France took the lead on foreign policy and defense matters, while Germany, given its size, dynamism, and innovation, took the lead on economic matters and government financial policies. With the Russian invasion of Ukraine, however, this balance between Germany and France has shifted.

Under the heading of “Zeitenwende”, Scholtz decided to increase Germany’s defense budget above the NATO agreed level of 2% GDP, investing a total of 100 billion Euros in defense. Paris had hoped this money would help fund joint European defense industry projects, but instead the first German decisions point in a different direction. Indeed, in a move that disappointed France but is indicative of Germany’s security priorities, the Germans moved to purchase F 35’s fighter planes off the shelf from the United States and Arrow 3 missiles for air defense from Israel.

On the economic and government fronts, tensions between Paris and Berlin were visible in the energy dossier last year. The energy market price challenges resulting from cutting off Russian products led to substantive compensation packages, government subsidies and price ceilings in Germany. Only with great difficulty and strong French insistence were these translated on the European level. More generally, France wanted higher EU spending and EU-guaranteed national lending, while Germany, which would have to cover a relatively larger part of the cost, was more hesitant. Further, while France believes its focus on nuclear energy has been validated by current events, Germany persists in phasing-out nuclear energy.

Judging from the outcome document of the Élysée summit, however, discord and discussions are being set aside to ensure a joint vision for the future. And while coherence among EU members on investing in extra defense capabilities is self-evident and hardly original, there are some notable new initiatives that will require innovative solutions and collaboration between France and Germany. There’s fresh and increased security focus on both cyber and space – areas where buying products off the shelf is not feasible. The same applies to renewable energy initiatives, where bilateral investments in hydrogen, decarbonization, nuclear fusion and new battery technology will be necessary to translate the vision into reality.

Completing projects like the European Capital Market Union, the European Banking Union and enhancing the European Technology Champions Initiative are additional EU goals that will require support from both nations. Both Germany and France will be implemental for further institutional EU reform, by enhancing QMV voting, areas where no full unanimity is needed to make decisions, and modernization of EU electoral law provisions. Additionally, a joint investment in cultivating a younger generation of leaders, through the Génération Europe – Jeunes talents franco-allemands/Generation Europa: Deutsch-Französische Nachwuchskräfte initiative, shines in stark contrast to the UK’s decision after Brexit to no longer participate in EU student exchange program Erasmus.

These projects are promising and present areas of joint opportunity for the French and Germans. And if the two nations can continue to work through their areas of division, as demonstrated in more recent weeks, the EU will be all the stronger because of it. Needless to say, as the battle between Russia and Ukraine shows little sign of stopping, there’s no more important time for EU to be a strong and positive democratic global force.