May 25, 2018

Silk Road Headlines

Silk Road Headlines

23 May 2018

Source: Louis Vest/flickr

 An important theme in this week's Silk Road Headlines is choice. As the Arab proverb goes: "Choose your neighbour before your house and your companion before the road."

A policy paper of King's College London states there is a paradigm shift in geopolitics. The paper delves into the added value of the United Kingdom as a strategic ally and it positions the UK as a vital partner for technological developments. Also, it highlights its financial hub and emphasizes the role of internationalizing the RMB. The paper also subtly displays the sensitive balancing act of the UK: finding new alliances between two superpowers, China and the United States. Yet, the paper leaves critical information out, mainly on the current partnerships of the UK. For example, the AIIB-membership of the UK remains unmentioned, as well as the long-lasting cultural and historical relationship with the US, of which the UK benefitted from the Marshall plan. Lastly, it does not dwell on Brexit, i.e. the necessity of looking for partnerships with superpowers [The Belt and Road Initiative: defining China's Grand Strategy and how it relates to the UK and China].

Japan and China are competing with each other on infrastructural projects within their region, e.g. Indonesia and Thailand. Chinese consortia are undercutting Japan by offering lower prices for realizing projects and offering shorter, albeit unrealistic, time-scales. This modus operandi provides the necessary challenges for the projects it has to deliver. Nonetheless, Japan is extending an olive branch in order to team up with Chinese consortia with projects within Asia, and possibly Africa. This cooperation might provide synergy and eventually more harmony within their difficult relationship [The China-Japan Infrastructure Nexus: Competition or Collaboration].

Africa on the other hand has set a building block for accelerating continental integration. The first step was taken on March 21st, 2018 in Kigali, Rwanda. The African continental Free Trade Area (AfCFTA) was signed and will be ratified in due time. This trade area provides not only exporting opportunities (infrastructure) for BRI, but also facilitates investments in digital connectivity between African states, e.g. implementing 'cloud computing' in Africa. Thus, making the AfCFTA a suitable free trade partner for the BRI [A Digital Free Trade Agreement for Africa's Silk Road].

A free trade agreement with the Eurasian Economic Union (EAEU) enables China to transport its goods across the Eurasian landmass (+ 6,000 km) duty free, up to the borders of the European Union. The EAEU consists of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, thus connecting the borders of China and the EU. Such an agreement has a lucrative side-effect for China to tap into an ancillary market with approximately 180 million people and a GDP of $4 trillion [Russia's Eurasian Economic Union Free Trade Agreement with Beijing Brings Chinese Goods to the EU Border]. The agreement would also facilitate more trains to Antwerp or any other destination in Western-Europe [Belt and Road landmarks as first direct freight train arrives in Antwerp from China].

The BRI receives a lot of critique and is doubted for its opaqueness, (difficult) governance and especially (high) debt-risk. Yet, China acts swift and independently, while other actors are reacting and grasping the strategy behind every move. In short, China takes its time to pick its own cherries and shares them when necessary. The consequences of realpolitik China is facing can be summed up by an old Chinese proverb: “One should be just as careful in choosing one’s pleasures as in avoiding calamities.”

Ali Cikmazkara

This week's Silk Road Headlines

New ‘Silk Road’ Brings Challenges And Opportunities For Biodiversity Conservation [Eurasia Review]

Belt And Road Initiative Enhances Pakistan’s Maritime Security, Decreases Likelihoods Of War Between India And Pakistan [Eurasia Review]

Opinion: Bonding with China [The Statesman]

Russia’s Eurasian Economic Union Free Trade Agreement With Beijing Brings Chinese Goods To The EU Border [Silk Road Briefing]

A Digital Free Trade Agreement for Africa’s Silk Road [Silk Road Briefing]

The China-Japan Infrastructure Nexus: Competition or Collaboration? [The Diplomat]

The clouds gathering around China's Belt and Road [Nikkei Asian Review]

Belt and Road landmark as first direct freight train arrives in Antwerp from China[Seatrade Maritime News]

The Role of Investors in Promoting Sustainable Infrastructure Under the Belt and Road Initiative [Chatham House]

The Belt & Road Initiative: Defining China’s Grand Strategy And How It Relates To The UK & China [King’s College London, Policy Paper Series issue 7]

THE GROWING RELEVANCE OF GEOPOLITICS FOR EUROPEAN BUSINESS

25 MAY 2018 - 13:07

 DOWNLOAD POLICY BRIEF (PDF)



Today’s international business environment is less predictable, more volatile, and involves more politics than in previous decades. The declining economic weight of the United States and growing doubts about its leadership role in global governance have important implications for European companies. There is a growing likelihood of high-profile incidents in which large enterprises suffer major financial and reputational damage from geopolitical risks – whether through sanctions, state-sponsored cyberattacks or geopolitical shocks. But while managers increasingly regard geopolitics as relevant to their activities, for many companies this insight has not yet resulted in changes to their behaviour.

In this Policy Brief an analysis is presented on the change in the geopolitical landscape, among others caused by the erosion of the US-led liberal international order and the declining role of the US as its main sponsor. Author Frans-Paul van der Putten indicates a number of implications for European companies:

Greater political uncertainty;Diminished functionality of global governance;Politicisation of international economic relations.

Also a number of geopolitical risks for businesses is included:

Boycotts, sanctions, embargoes and other politically motivated trade restrictions;Cyberattacks by state actors;Geopolitical shocks.

There seems to be an increasing interest in geopolitics among enterprises, which expect (geo)political and macroeconomic instability to affect their business. However, very few companies seem to have taken steps to address these issues. Yet, in order to be able to operate in a more uncertain, more volatile and more politicised international environment, European companies have to become more responsive and need to enlarge their geopolitical awareness. Geopolitics are increasingly regarded as a regular component of the business environment of many middle-sized and large European companies

CONNECTIVITY AND BEYOND: IMPROVING EU/NL-INDIA TIES

https://www.clingendael.org/event/connectivity-and-beyond-improving-eunl-india-ties

25 JUN 2018 13:45 - 17:00

BACK TO RESULTS

INTRODUCTION

Connectivity and Beyond: Assessing the scope for EU/NL-India Cooperation

This symposium is co-organised by the Netherlands Ministry of Foreign Affairs as part of the Asia Carousel series and the Clingendael Institute. It contributes to Clingendael's work conducted within the PROGRESS research framework agreement and to Clingendael-IDSA cooperation within the EU-India Think Tank Twinning Initiative. For further information please contact Maaike Okano-Heijmans.

A unique window of opportunity presents itself in EU and Dutch policy towards India. As the EU and its member states are seeking to deepen relations with so-called ‘like-minded countries’, India under Prime Minister Modi is actively looking for partners in political and economic cooperation. The Netherlands can engage India as a regional and global partner and as a counterweight to China, bilaterally and as through the EU, building on the forthcoming EU-strategy on India.

What steps should Delhi, The Hague and Brussels take to deliver on the ambition of deepened relations, and what are the chances of success? Can NL/EU connect to the Asia-Africa Growth Corridor, put forward by India and Japan? For this purpose, can NL leverage membership of the International Solar Alliance and trilateral cooperation in areas like digital financial inclusion and waterways connectivity? How successful is the new Dutch approach to CSR and what can other EU member states learn from this?

13:45                    Registration-tea/coffee

14:00 - 15:15   Dynamics in Asia-Europe: geo-economic context offering new opportunities?
Speakers:           Jagannath Panda (Institute for Defence Studies and Analyses-IDSA)
                                 Maaike Okano-Heijmans (the Clingendael Institute)
Moderator:       Peter Potman (Netherlands Ministry of Foreign Affairs)

15:15                   Tea/coffee

15:45 - 17:00   Building blocks and new approaches to NL-India political-economic cooperation
Speakers:           Prachee van Brandenburg(ASSOCHAM Netherlands)
                                 Bernedine Bos (MVO Netherlands/CSR Europe)
Moderator:       Marten van den Berg(Netherlands Ministry of Foreign Affairs)

17:00                   Drinks

This symposium brings together a broad group of stakeholders, policymakers, private sector representatives and other interested parties to discuss these topics in their Dutch and broader European context. Introductory statements by the speakers will be followed by a moderated Q&A and discussion with all participants.

This event may be recorded by photo, film or sound, or broadcasted by live-stream via internet. By attending this event you confirm that you agree to these terms.

ORGANISER

Maaike Okano-Heijmans

Senior Research Fellow

Europe Should Defend the Iran Deal Without Burning Bridges to the US

https://www.chathamhouse.org/expert/comment/europe-should-defend-iran-deal-without-burning-bridges-us



18 May 2018

Precisely because America is more than Trump, it is crucial for Europeans to defend the JCPOA.

Dr Robin Niblett CMG

Director, Chatham House

Twitter

Thomas Gomart

Director, Institut francais des relations internationales

Dr Daniela Schwarzer

Director, Deutsche Gesellschaft für Auswärtige Politik

Nathalie Tocci

Director, Istituto Affari Internazionali

2018-05-18-E3Iran.jpg

Preparations are made for European leaders to meet with Iranian representatives in Brussels on 15 May. Photo: Getty Images.

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US President Donald Trump’s decision to withdraw from the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), will severely degrade regional and global security. His decision has increased the risk of war and a nuclear arms race in the Middle East and beyond. He has undermined attempts to limit the proliferation of nuclear weapons through multilateral diplomacy, as unilateral withdrawal equals non-compliance with a legally-binding UN Security Council resolution. This is a rejection of the UN as arbiter of international peace and security, as well as of international law as a lynchpin of international relations.

The steps that Europeans now take will have serious consequences for their alliance with the US, for security in the Middle East, as well as for their relations vis-à-vis China, Russia and the wider world.

When it comes to Iran, the E3/EU and Trump have diverging interests. On top of the domestic considerations that drive him, President Trump would like to see regime change in Iran and/or the victory of Israel and Saudi Arabia over Iran and its regional partners. He depicts the nuclear agreement as a 'bad deal' because it does not further that goal. By contrast, killing the deal and hence preventing Iran from reintegrating into the international community economically and politically exerts maximum pressure on Tehran, potentially triggering the downfall of the regime. Given what we have seen in Iraq since 2003, this is an extremely dangerous course of action for the region, but also for Europe.

Since President Trump’s decertification of the JCPOA in October 2017, the E3 – France, Germany and the UK – have tried but failed to convince the US to remain in the deal, discussing with the administration how best to constrain Iran’s ballistic missile programme and regional role. Yet, trying to mollify Trump has been a lost cause: not only because of the president’s views, but also because any deal with Iran entails conferring a degree of US acceptance and legitimacy toward the Islamic Republic, which is anathema to many in America, as well as the Iran hawks now solidly at the helm of the Trump administration.

In contrast, Europeans have a strategic interest in defending the Iran nuclear deal, given its role as a key plank against the risk of further nuclear proliferation in the Middle East. Both Europeans and Americans have a strategic interest to fight nuclear proliferation, but the role of the JCPOA in achieving this goal is interpreted very differently. The question is how the E3/EU now use this moment to apply leverage towards their own strategic objectives.

Ironically, we are back at 2003, where the US invasion of Iraq provided the E3/EU with the opportunity to negotiate with the Iranian government to halt what was then its clandestine nuclear programme. Europeans now need to use Trump’s unilateral withdrawal from the JCPOA to try to achieve what are genuine transatlantic as well as European goals: a containment of Iran’s ballistic missile programme, a de-escalation of its political-military engagements in Syria, Lebanon and Yemen, and security for Israel.

Unlike the Trump administration, in the broader regional conflagration of the Middle East, European governments and institutions see no possibility for one side winning squarely over the other. Instead, most believe that the seeds of a cooperative regional order lie in a balance of power in the region in which no regional player is excluded. Only by achieving this sort of a regional balance can Europeans also hope to tackle their own core security interest, which lies in the defeat of jihadi terrorism, ISIS first and foremost, but also a containment of the regional arms race.

This will require the E3/EU working with the remaining UN Security Council members and with Iran to keep the JCPOA alive, as announced in the meeting with Iranian Foreign Minister Mohammad Javad Zarif earlier this week. In practice, this means the E3/EU taking specific steps to help protect European commercial investments in and trade with Iran, even if some major European multinationals choose to or are forced to withdraw. It also means resisting US pressure to close Iran off from the SWIFT financial transfer system and other such extra-territorial steps.

The Trump administration may object, but these steps cannot be construed as helping Iran’s quest for nuclear weapons, which President Trump has said would lead to US retaliation. And, while remaining faithful to the JCPOA, Europeans can still step up their challenge to Iran’s increasingly problematic role in the region.

Europe and the US have traversed rough moments before. When the E3/EU first engaged the Iranians in talks over their nuclear programme in 2003, the George W Bush administration was adamantly opposed. In time, the incontrovertible reality of Iran’s advancing nuclear enrichment programme forced upon the US the need to find a diplomatic solution. Precisely because America is more than Trump, it is crucial for Europeans to defend the JCPOA, thereby preserving this diplomatic structure in the event that the United States decide to return to the path of multilateral diplomacy vis-à- vis Iran.

If Europe has the ambition to become strategically autonomous, fighting for the JCPOA is the place to start. The EU will only be able to negotiate effectively with the US over Iran if it develops its own strategy, and demonstrates its ability to act based on its own interests