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CAUGHT IN THE MIDDLE!! Page
CAUGHT IN THE MIDDLE!!
South Korea finds itself in a delicate balancing act as the US-China tech war heats up.
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South Korea is one of the handful of nations in Asia—or maybe the entire world, for that matter—with extensive historical links to China and a critical partnership with the U. S. Given the escalating rivalry between the United States and China, which has spilled over into the arenas of trade and technology, Seoul is increasingly coming under unprecedented strain.
Throughout the years, South Korean regimes, whether conservative or progressive, have closely cohabited with both the United States and China. Despite Beijing’s ownership of the regime in Pyongyang, Seoul has always courted the Chinese, not only to keep a restraining hold on the rabid regime in their north but also to feed the hungry manufacturing industry of China with its products. Since South Korea’s political survival and economic prosperity are inalienably linked to the U.S., Seoul has always been America’s closest ally in Asia.
As the divide between the United States and China widens, South Korea increasingly finds itself in a difficult position trying to seek equilibrium in its relations with its two pivotal partners.
THE FULCRUM OF U.S. ASIAN PIVOT?
In 2010, the Obama administration conceptualised its ‘Pivot to Asia’ strategy, which entailed ‘rebalancing economic, diplomatic and military assets to Asia’ from other parts of the world. Some analysts have called it a mistake because they allege it prompted China to respond with aggression and acted as a catalyst for China’s accelerated economic, diplomatic and military activity in the region.
While a damper was put on the Asian Pivot by Trump’s ‘America First’ policy, the Biden administration, despite its involvement with Eastern Europe, has tried to revive its Asian strategy. Washington has signalled the resurgence of American influence on the Asia Pacific region and its willingness to confront a belligerent China with an intensified military and economic presence to forward U.S. interests.
Expectantly, Seoul is a critical component of any American Pivot to Asia. Apart from the security and economic dimensions, the U.S. and South Korea have a deeper need to strengthen their technical collaboration, considering South Korea’s position as a major supplier of electronics, including semiconductors, to both the Chinese and American markets.
Purely in commercial terms, the Chinese rise is being sustained by its expanding trade with erstwhile American trading partners, where Beijing is rapidly replacing Washington. This is a cause for serious concern in the U.S.; in 2001, 80 per cent of principal trading countries globally ranked the U.S. as their primary partner-now, 120 countries, including South Korea, Japan and the EU, rank China as their top trading partner!
technologically have been aided by globalisation. Short-term perspectives focussed largely on profits have ensured that the American industrial base as a whole has shrunk, particularly in critical sectors like semiconductors. On the other hand, South Korean electronic production has skyrocketed.
The semiconductor industry accounts for twenty per cent of the world’s semiconductor market in South Korea. Around 70 per cent of the DRAM market and almost 50 per cent of the NAND flash memory market in the memory industry are accounted for by Samsung and SK Hynix, respectively. Advanced technologies such as sixth generation (6G) telecommunications, artificial intelligence and supercomputers need cutting-edge chips; South Korea (and Taiwan) lead their production.
Therefore, it is not surprising that the U.S. is turning to friends like South Korea to strengthen its industrial base. One of the first moves in this direction included collaborating with Samsung to establish a second semiconductor fab in the U.S. This is part of the $40 billion investments package agreed to in the 2021 Moon-Biden meeting. The growing demand for consumer durables, primarily to blame for the current worldwide semiconductor shortage, has only served to emphasise South Korea’s significance to the United States.
While the United States and other nations lead the world in data and artificial intelligence, South Korea has advantages in semiconductors and, to a lesser extent, in network equipment. However, Seoul has established rules to establish an ecosystem for data, networking, and A.I. because it recognises the importance of data and A.I. to the future of its industry.
A future area of mutually beneficial cooperation in augmented and virtual reality may also be possible as U.S. and South Korean businesses work to establish the metaverse. South Korean businesses are already essential allies of the United States as it works to switch to electric vehicles in the energy transition.
South Korean companies have a strategic interest in working with the United States since China has mostly kept South Korean battery manufacturers out of its market while it has produced indigenous champions. It makes sense for Seoul to preserve its alliance with Washington and, despite tense relations with Tokyo, work to deepen U.S.-South Korean- Japanese security co-
Source : New York Times
In the complex triangle of the U.S.-South Korea-China relationship, North Korea, under the unpredictable Kim Jong-un, remains the elephant in the room. Rattling its nuclear and missile sabres at its neighbours with increasing frequency, Pyongyang can upset the cart without warning. This inhibits Seoul’s ability to put all its eggs in the American basket as only Beijing has a semblance of control over Kim, and therefore, it could be fatal to push Beijing out of the equation.
AVOIDING THE DRAGON’S FIRE
South Korea’s strategic options with China are limited. Geographical compulsions and historical legacies make it imperative for South Korea to cultivate China carefully.
Irrespective of American pressure, Seoul can’t reduce its reliance on the Chinese market any time soon; no other matching option is visible on the horizon. South Korean businesses have already gotten a taste of China’s economic anger when the two countries engaged in a yearlong standoff over a U.S. missile defence system. A quarter of South Korea’s total exports were to China in 2019 (over $136 billion), contributing immensely to making it Asia’s fourth-largest economy.
South Korea is acutely aware of China’s expanding military presence in East Asia. Still, it has been far less outspoken in voicing its worries than other close neighbours, such as Japan. As a 2019 Carnegie poll revealed, 75 per cent of South Koreans polled admitted not trusting China at all, and 50 per cent feared China as their most deadly enemy (almost as much as North Korea!).
This is despite China bringing more than 24 per cent of the country’s overall trade. It is clear that if China decides to impose higher tariffs on South Korean chemicals, machinery, and other exports, the export-dependent South Korean economy will suffer deeply.
THE DILEMMA CONTINUES…
The portends of a ratcheting up of the U.S.- China rivalry should worry Seoul- the CHIPS and Science Act and the wide-ranging restrictions on tech exports to China by American companies and its allies are volleys being fired in the ‘tech war’ with increasing frequency.
Of course, the $ 52.7 billion bonanza that has been announced for U.S. semiconductor research and manufacturing by President Biden would benefit the South Korean industry as well. However, the South Koreans must find a way around the restrictions in exporting U.S.-designed technology to China. Not surprisingly, South Korea, which has traditionally prioritised keeping a balance between its economic relations with China and its security cooperation with the U.S., is now in a challenging situation due to this effort.
As per Nikkei Asia, Seoul pleaded with the U.S. Government for a compromise solution on behalf of its market leaders like SK Hynix and Samsung but could only get a one-year grace period before the export restrictions would be enforced.
The war of narratives is also heating up, and South Korea finds itself in the centre of it. Almost daily, op-eds from the United States and China advise South Korea not to lean toward the opposition. Slowly but inexorably, Seoul is being driven into a cul de sac from where there is no
Assessment
Although a conservative government would place more emphasis on the U.S. relationship, Seoul should maintain the delicate balance for as long as possible. Obviously, it will buy its insurance policy by enhancing its defence budget and implementing longer-term force improvement measures.
The historic Japan-Korea animosity is a stumbling block inhibiting both dynamic nations from realising the value of a common front against China. The incoming Japanese prime minister will find it difficult to reverse Japan’s traditional attitude toward South Korea. On his part, President Ban Kimoon should prudently keep relationson an even keel as he enters the last three months of his term.
In the tech tug-of-war between the U.S. and China, South Korea, with its technological knowledge and assets, will invariably find itself being pulled by both sides. This is a state to which Seoul must quickly adapt to preserve its prosperity and future.
POST-UKRAINE AND PRE-PLURAL
Has the war in Ukraine brought the world to the cusp of a new multipolarity in the global order?
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In building a new world order, the West has prioritised democracy as an essential base to foster economic institutions and political will. This Western model did not necessarily fall in line with Russia and China’s vision to liberalise their economy, improve the rule of law, and democratise politics. Analysts argue that the war in Ukraine and the response of the West could be as significant a turning point in strategic affairs as the 9/11 attacks were. We could be living with the repercussions of this invasion for perhaps another couple of decades.
# SHIFTING SANDS OF GEOPOLITICS
As Russia’s aggression in Ukraine continues, it’s quite clear that under Vladimir Putin, Russia will be a pariah state, isolated politically and economically. It seems unlikely that Russia will return to anything that looks like pre-invasion any time soon, as it has gone too far in its bid to control Ukraine.
This isolation has immediate impacts on the economic arena. The world has long depended on Russia for oil and gas, and a big chunk of Russia’s revenues also come from the sector. Despite the economic pain, the West is trying to get out of this dependency, although it will take some time. In the interim, the energy markets spike, and Russia stands to make immense revenues with big oil consumers like China and India, following the example of many European countries to replenish their strategic reserves with Russian crude.
Every day, a new set of sanctions are imposed on Russia. A significant proportion of Russia’s gold and forex reserves, amounting to $300 billion out of a total of $640 billion, stands frozen by sanctions from the West. The European Commission blocked seven Russian banks from accessing the SWIFT inter-banking system.
There has been an exodus of companies from Russia; among these, U.S. companies such as Shell, Pepsico and Mcdonald’s have either pulled out from Russia or suspended planned investments. The longterm economic impact on Russia can only be imagined.
Social media has ensured that the war in Ukraine has created varying narratives as both sides try to dominate the influence battle in cyberspace. Of course, President Zelensky seems to have got the better of Mr Putin on this account, being projected in the Western world as a stoic fighter and a great
The larger issue of food and energy shortage is scarcely affecting the prosperous North, while the global South is suffering for no fault of theirs. The Ukraine crisis came close behind the heels of the Covid pandemic, which had already upset the global economic and social fabric balance. Europe is not immune from this shock.
patriotic leader. His training as a professional comedian has undoubtedly prepared Zelensky to develop the sense of timing on the screen to get the maximum effect, and he is playing admiringly to a packed house! A dour, isolated and unsmiling President Putin is not helping to improve his image of the ‘butcher’ and ‘monster’ that the western media is painting him to be.
In the perception battle, the Ukrainian military seemed to have risen from the ashes and gone on the offensive in the East, winning back towns and settlements from a Russian army that appeared to be ceding hard-won ground. But since no independent reporters are being permitted into the battle zones, the conflicting claims are hard to verify. In any case, the earlier large-scale ground offensives launched by Russia do not seem to be taking place anymore, indicating a loss of momentum.
The Russians are largely indulging in smashing to rubble the critical infrastructure of Ukraine to ensure that the cost of recovery to President Zelensky and his western supporters continues to rise. And in these endeavours, surprisingly, Iran has emerged as a major partner. As per western media reports, Iran has allegedly sold more than 160 UAVs, including Shahed-136 ‘kamikaze’ drones, to Russia worth Euro 130 million (paid in cash); more drones and even short-range ballistic missiles are in the pipeline.
For the U.S., the war in Eastern Europe has been a God-sent opportunity to test the will and mettle of its European and Indo-Pacific allies. Japan, South Korea, Taiwan, New Zealand and Australia have steadfastly been behind all western support to Ukraine, and NATO has been revitalised. Important allies like Germany finally enhanced their defence budget, and the Nordic nations, willing to sacrifice their long-cherished neutrality (from which they have profited immensely), are lining up for NATO membership.
For the West, India has been the elephant in the room. With its presence in the Security Council as a temporary member, India has consistently resisted all western efforts to pull it into an anti-Russian camp. In this endeavour, it has found allies in Brazil, Saudi Arabia, UAE and most surprisingly, Pakistan! Of course, North Korea and Iran have been right from the start of
China has been rather ambivalent in its outlook; while reiterating its ‘limitless friendship’ with Moscow in various fora, it has refused to become an overt ally of Russia and thus attract western wrath and sanctions. China could view the West’s sanctions on Russia as a warning against any aggression.
It has now witnessed the repercussions of any overt aggression and the impact of a unified Western response. The Chinese economy is just as dependent on the global economy as the Russian one before the invasion, if not more so. This recent episode could possibly have a deterrent effect on China if it has ambitions of territorial aggression. So, President Xi Jinping, who publicly claimed at the 20th Congress of the CCP that the unification of Taiwan was a given thing, may have to review the blueprints of how this is to be achieved. As Ukraine has demonstrated, the military option is a path strewn with pitfalls.
There is a need to examine how the Ukrainian war is reshaping the global order, how is the redefinition of international balance among great powCHURNINGS IN EUROPE
Europe has been at the forefront of this crisis. As a result, many European countries in the Mediterranean region have come together along with their African and Middle Eastern partners as part of the MED 2022 to discuss what the post-Ukraine world order demands. The war in Ukraine is a regional conflict with international implications because of the positions taken by NATO, the EU, US. The MED conference highlighted that this situation could improve regional cooperation.
In a visit to Algeria, the Italian foreign minister gave voice to his country’s desire to seek a larger collaborative effort to resolve the crises created by Ukraine. In this, he was echoing the sentiments of many of his European counterparts who do not wholeheartedly back the trajectory being orchestrated by the U.S.
The larger issue of food and energy shortage is scarcely affecting the prosperous North, while the global South is suffering for no fault of theirs. The Ukraine crisis came close behind the heels of the Covid pandemic, which had already upset the global economic and social fabric balance. Europe is not immune from this shock.
ers reflected in an area so caught in the dynamics of change, and how the Mediterranean region positions itself in this environment.
PAOLO MAGRI Executive Vice President, Italian Institute for International Political Studies in MED 2022.
Europe has long been dealing with the problem of refugees streaming across its shores from Asia and Africa. Now, these have been joined by white Ukrainians, who, for now, are being received with open arms. It is a matter of conjecture how long this welcome will last as the war gets prolonged; signs of strain are already appearing in border states like Poland.
Multilateral agencies like the UN have taken the biggest hit. It has once again exposed their inability to prevent wars and bring about an early cessation of hostilities once the shooting starts.
HIGH ECONOMIC COST
After almost two decades, the U..S dollar has been gaining strength due to the high-interest rates imposed by the Federal Reserve. This has global implications as most nations are irrevocably linked to the U.S. dollar for their external trade and FDI.
However, there appear to be faint signs that Russia, aided by China, would endeavour to diversify international reserves, increase the use of currencies other than the dollar in trade and consequently undermine the status of the U.S. dollar as the global currency. How this will pan out in the next 12 months is still unclear, as the dollar remains supreme.
The arms industry has been an un-untended but large beneficiary of the Ukraine war. The battlefields of Ukraine were the first in modern warfare after the Second Gulf war, where all sides could test their arsenal in combat.
This led to all sides claiming successes in hyperbolic terms to enhance the attractiveness of their inventories to gullible nations with weapon-starved militaries. Even conservative European democracies have been forced to revamp their arsenals, shedding their older weapon systems to the new East European entrants into NATO. It is a good time for the arms industry as the new Cold War between the West and China-Russia intensifies.
Post-Western and Pre-Plural: The Alternative Discourse Significant transformations have taken place across the globe that challenge the Western democratic frame as the sole repository of freedom and development. These have often not been recognised by the West, and China’s scepticism and even condemnation is one such contemporary example.
With respect to the Russia-Ukraine war, views of non-aligned countries - India, Pakistan, Brazil, Nigeria and Egypt, further reveal the disconnect between Western perceptions and the positions of non-Western countries. The conflict in Europe is, at the same time, both a symptom and a catalyst of the emergence of the post-Western world, which analysts argue began as far back as the decolonisation period post-1945.
The Russia – Ukraine war has been reported in western media as taking place in a “civilised” country, as opposed to uncivilised, non-Western and non-white majority nations. Other actions of brutality by Western countries in Iraq, Algeria, Kenya, Indo-China and most recently, Afghanistan have conveniently been brushed aside. The invasion of a European country has clearly been placed on a pedestal presenting distinct racial undertones. Beyond reportage, refugees from Ukraine have been accepted with far more ease than those from other war-torn nations.
New geopolitical and economic arrangements between non-Western countries are bound to restructure (such as including India and the African Union in the UN Security Council) or understanding that there are alternatives to Western doctrines in diplomacy and trade, such as the ASEAN format.
The emergence of this post-Western world can also be viewed as “pre-plural”, wherein the axis to global power could possibly be multi-polar. This is characterised by a world order in which the axis of global power will no longer be so actively tilted by a single nation or a group of common nations - the West, which comprises just 15 per cent of the world’s population - but by many.
Assessment
In some ways, globalisation has proved unsuccessful in responding to the needs of the Covid situation and now also the war in Ukraine. International peace had been taken for granted after the fall of the Berlin War. The new realities are quite different and worrying.
The realignment of the world order seems inevitable. As international organisations and leading countries assume important positions with respect to the war, we are witnessing a marked shift away from the erstwhile global power structure. Will this realignment be for the global good or otherwise, is something nations like India would be anxious to find out.
India, Brazil, and South Africa are emerging economies whose alignment can carry weight to determine the balance of power in any new world order. We are, therefore, at the cusp of a powerful shift in international politics, and while much remains unknown, a plurality of power seems imminent.
INDIA’S G20 PRESIDENCY: A NEW POLE?
India’s presidency of the G-20 is a fleeting opportunity to correct the forum’s drift towards an inconsequential existence.
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Established in 1999, the G-20 is an informal annual meeting of twenty of the world’s largest economies. It includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, and the United States – plus the European Union.
Collectively, the G-20 members produce 80 per cent of the global GDP, 75 per cent of its trade, and 60 per cent of its population! Despite these impressive figures, there is a general feeling that the forum has failed to live up to its expectations in tackling some of the most pressing problems.
At the time of its birth, the objective given to the G-20 was global financial stability, as the world economy was trying to recover from the economic shock that began in Asia in 1997, and the G-7 felt it was beyond the narrow group to tackle this huge challenge. For almost a decade, only the finance ministers and central banks participated in its annual meetings before the heads of state started making an appearance. It was originally designed as a tool to address macroeconomic and financial issues, but today its agenda is much broader-unemployment, corruption, climate change, digital technology, etc. ation, the G-20 confronts a world facing an even more depressing economic future than the 1997 Asian economic meltdown. The world is facing huge challenges due to post-pandemic blues, debt distress, food and energy security, the triple planetary climate change crisis, biodiversity loss and pollution, and instability and conflict impacting people globally. The G20, which has a wider representation than the G7, must take up the cudgels on behalf of the global South.
As the voice of the Global South, India must convince the Global North to assume greater responsibility and take on the financial burden to make a more equitable world, especially the role that major food and energy-producing countries must play in these trying times. While profits are important, the larger survival of the human race is equally critical.
WHAT DOES INDIA BRING TO THE TABLE?
It will not be easy for India to make a meaningful difference in the manner in which the G-20 has functioned, considering the informal way business is conducted when the G-30 convenes. Also, the challenges confronting the G-20 are unprecedented, and with both sides of the new Cold War participants, it would be difficult, if not impossible, to achieve consensus on any issue.
Notwithstanding, India is in an advantageous position as it enjoys reasonably good relations with all the major power centres in the world and is seen as a non-expansionist power. As a result, India could be well placed to bring countries together to fight for common causes, more so because, unlike the bulk of the global community, India can claim that it has so far avoided falling into the recessionary trap.
Several reasons have caused the global economic crisis. First, the Covid-19 pandemic has destroyed many developing and developed economies worldwide. It will take the global economy a few years to completely recover from these aftereffects.
As the countries were trying to emerge from the pandemic, the war in Ukraine started to create even worse disruptions in energy and food supply chains and distorting markets. The sharpening rivalry between the U.S. and China is also raising tensions and threatening to impact globalisation negatively.
On its part, India has tried to help other developing countries during the peak of the pandemic by shipping large doses of its homemade vaccine, which helped create a positive image of New Delhi.
The global Covid-19 pandemic has unevenly affected the world. Developing countries have been more seriously impacted than developed ones. The subsequent economic fallout, too, was unevenly spread, with the poorer nations facing the greatest brunt. While the media focus remains on the plight of Europe, suffering from energy deficiency and the cost of living crisis, India would do well to refocus attention on the global South’s needs, which is starving.
To begin with, India must share more openly what it has learnt from dealing with the pandemic and the post-pandemic economic shock with the rest of the world, particularly the developing one. Here the greatest success story lies in India’s development of its indigenous vaccine. India needs to be different from the Western countries, which were extremely guarded in sharing their vaccine technology. India can act as a beacon for developing countries so that they do not have to rely on Western support the next time a global pandemic hits. India should set up a globally funded system through the G20 mechanism to achieve this objective.
The ongoing Russia-Ukraine war has further complicated this recovery by putting more pressure on developing countries. Delhi has astutely kept the middle distance in the Ukraine issue and the US-China ‘cold war’. Now is the occasion for India to carry this goodwill forward as president of the G20 forum.
For India, its role is quite clear in this situation. As the leader of the G20, it must listen to all sides and then arrive at a common consensus that will benefit everybody. India’s diplomatic skills as a mediator will be put to the test here. It can also offer solutions based on its own experiences, which both sides are willing to listen to.
As the voice of the Global South, India must convince the Global North to assume greater responsibility and take on the financial burden to make a more equitable world, especially given the role that major food and energy-producing countries must play in these trying times. While profits are important, the larger survival of the human race is equally critical.
Source : Cartoon Movement
INDIA AND THE GLOBAL SUPERPOWER RIVALRY
With its historical animosity with China, India was expected to move slowly towards the Western camp on this issue. And even though India has increased its formal and informal cooperation with like-minded countries to stand up to China, it has also sought to continue to engage its northern neighbour. If any conflict breaks out between the West and China, then it will affect India directly.
So, India has a special interest in seeing that China continues to be a responsible player in the international system. With a long-disputed border with the People’s Republic, it cannot afford anything less.
The G20 is the ideal forum to bring the U.S. and China together. Both superpowers are interested in the stability and continuation of the international system. This is the starting point that India should use to make these two powers engage more with each other through the mechanisms of the G20 and other international organisations.
Simultaneously, India can continue to build up its security to counter the Chinese threat. The two are not mutually contradictory. In fact, reducing tensions between China and the United States will ensure that Beijing is more open to negotiations with India. If China sees itself as less threatened by the West, it will also see India less as a Western appendage and more as a fellow Asian country with which it can talk.
THE RUSSIA-UKRAINE CONFLICT
India is one of the few countries that has tried to maintain a consistently dispassionate position throughout this war, especially in the developing world. It has not fallen under diplomatic pressure, either from the Western or the Russian side. It has always been seeking to maintain its own interests while at the same time urging both sides to sit at the table and talk with each other.
As the president of the G20 organisation, India has the scope to play a mediating role in bringing the two sides of this conflict to a common understanding. Ukraine is not a member of the G20, but Russia, the United States, and many U.S. allies are. Both sides must be convinced that this conflict cannot continue without taking the whole world down with it.
India might not achieve a final peace through its G20 presidentship in ending the Russia-Ukraine war. But a process might be started that could be taken forward in other forums. The Russian economy will also have to be integrated back into the global economic system along with the economic reconstruction of Ukraine after a final peace deal is signed. India can initiate these measures as the current leader of the G20.
CLIMATE CHANGE
Climate change has already received special attention from India in its official pronouncements as president of the G20. As a country that will be directly affected by climate change, India has to push for more affirmative action and unity on this issue through the G20 mechanism. Like many other developing countries, India also must manage its climate change goals with its economic development goals for the long term.
One area that shows increasing promise for a developing country like India in the fight against climate change is the field of green technology. This is the area on which India has sought to focus during its G20 presidency, and India will urge greater investment in green energy from developed countries.
This is an ethical responsibility since many developing countries will be affected by climate change in a much more severe way than their developed counterparts, even though the advanced countries are mostly responsible for creating the problem of global warming in the first place. For this, international economic governance has to shift to benefit the Global South. India has to be the voice of low and middle-income countries on climate action through its G20 leadership.
GLOBAL CYBER WARFARE
Cyber warfare has emerged as a new and uncertain domain in global geopolitics. There are various actors in this type of warfare, both state and non-state. Norms and regulations have not yet been set, so currently, a lot of nefarious activity is going on in the cyber arena internationally.
India can urge the major powers to come to some common ground on the do’s and don’ts of this type of warfare. India is already moving ahead in the development of its cyber infrastructure. Hence, it has interest to see to it that some common norms are established in the cyber arena which are accepted by all countries.
Assessment
The G20 has recently come under fire for internal strife and a failure to enforce norms. The slide started during the tenure of President Trump, who did not place much faith in multilateral organisations, which he considered fractious at best, more suitable for small nations like Singapore to fight their battles from. There is an element of truth in this, as the informal nature of the G-20 means no binding resolutions or sanctions. However, it is invaluable for fostering conversations between world leaders.
This is a unique chance to contribute to the global agenda on urgent issues such as, climate financing, inclusive, equitable, and sustainable growth, women’s empowerment, digital public infrastructure, and tech-enabled development. If India could have carried the day, it would have won a seat at the high table. However, we must be realistic enough to accept that the G-20 has lost much of its shine over the years, with internal divisions only stretching, especially between the rich and the poor.
India, an emerging technology power, has the potential to redefine numerous aspects and steer the discourse in this area at the level of foreign policy. The need of the hour is to facilitate shared frameworks that are open, transparent, and equitable for the use of emerging technologies like AI, M2M technologies, quantum, cyber-physical systems, etc.
UNDERSTANDING THE MIDDLE CORRIDOR
The Ukraine War has rendered the traditional routes of global commerce through Russia-controlled Eastern Europe unviable, triggering the search for alternative corridors.
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Modern trade in the globalised economy is hinged upon a secure, resilient, and integrated freight transportation system that seamlessly connects the economies of Europe and Asia. Traditionally, the land, sea, and air routes flowing across the Russian Federation and its neighbours provided this corridor. However, all this has been changed overnight by the war in Ukraine.
In the context of increased geo-economic uncertainties brought on by Russia’s invasion of Ukraine, recognising shared geopolitical interests and establishing cooperation over widening supply chains have become more critical. The supply chains would translate into transnational, financially feasible transport corridors in the East-West dimension.
This has thrown the spotlight on the Trans-Caspian International Transport Route (TITR), an intercontinental network of roads, railway lines, and shipping routes that traverses Central Asia, the South Caucasus, and the Middle East while avoiding Russian territory. This shift in transit routes stands to benefit TITR’s host economies-Azerbaijan, Kazakhstan, Georgia, and Turkey.
Following stringent economic sanctions against Moscow, the major transit nations situated along this overland trade route have taken decisive action to realise the commercialisation of this multi–modal, cross-regional route. They intend to increase the opportunities for transcontinental transit and draw in more international shipments.
GLOBAL PLAYERS IN THE ROUTE
For the various states involved, the TITR means different things.
Turkey started the Middle Corridor plan with the primary goals of connecting Eurasia with a different multimodal route and improving regional cooperation and coordination with the transit nations along the TITR. The Middle Corridor is a particularly desirable commercial route from the standpoint of Ankara, not only because it offers direct access to Eurasia but also because it lessens the other Turkic states’ reliance on Iran and Russia.
There is room for growth along the trans-Caspian route as well. A significant regional player, Iran, remains blocked out of TITR due to sanctions after the collapse of the nuclear agreement. Under the pressure of sanctions, Iran’s ties to the Caspian littoral states have weakened. That has not,
however, negatively impacted interstate ties per se, and it also does not lessen the profound cultural impact Iran has historically had on Central Asia. Iran also has access to the sea, while Central Asia does not. The port of Chabahar will be connected to the trans-Iranian railway system, which connects to a port on the Caspian Sea. Notably, India is supporting the building of this port. Iran, therefore, offers enormous potential as a market for Central Asian commodities and a source of input for getting shipments from China to Europe and Central Asia.
The trans-Caspian transportation system is part of China’s broader ‘‘One Belt, One Road” plan, which aims to revive the historic Silk Road. Chinese authorities are sympathetic, and Ukrainian ministries are incredibly optimistic about its potential. Chinese Foreign Ministry spokeswoman Hua Chunying said, “As for the proposal by the Ukrainian side and some other nations on establishing a new transit route, China also supports it.”
On the arrival of the initial test train, caution was exercised by pointing out that the trans-Caspian route still had two significant issues. The first is price: according to Ukraine’s State Railway Service, carrying a 40foot container by train (and ferry) costs roughly $8,900. Transport conducted solely by sea is around 30 per cent less expensive. Time is the second. Moving freight from the ferry to the train takes time and depends on ferry and railway operation, which needs to be more frequent to be economical and could be negatively impacted by the weather. Assessment
The trans-Caspian route checks off several boxes: it not only bypasses Russia but also offers potential benefits from Iran’s opening, and ultimately, more trade alternatives delight China. The onus now lies on the beneficiary countries to leverage the moment to gain strategically and economically through shared economic and political ties to ensure long-term gains from TITR.
The improvement in regional integration along the “Middle Corridor” challenges the well-established northern way through Russia. The European Union and the United States are likely to continue to enhance their support for that development. At some future date, the West may allow greater participation by Russia and Iran once geopolitical circumstances permit their rehabilitation into the global economy.
Some of the most radical anti-fossil fuel initiatives have been re-examined and moderated in response to the conflict in Ukraine, the energy crisis, and the rise in European energy costs. If policies take on a more aggressive form, the region may suffer from falling demand for oil and gas. However, the transit charges for other trades unrelated to gas and oil will continue to earn them revenue.
LOOKING AHEAD…
Recent high-level interactions indicate encouraging trends that will support cooperative strategic initiatives, maintain institutional and diplomatic frameworks, and open the door to greater collaboration across a wider Eurasian region. Therefore, all initiator governments will continue to be concerned with strengthening the strong partnership on the China-European route and emphasising the establishment of the Trans-Caspian route as an established alternate transit passageway in the coming years. To that aim, it needs to be seen if the Trans-Caspian route could substitute for the well-established Trans-Siberian railroad networks that travel via Russian territory as the best possible supply route.
The Middle Corridor will continue to grow as an economic zone with increasing attention and backing from the U.S. and the EU. These two partners see an opportunity to strengthen the energy and supply systems’ resilience.
Additionally, to avert the struggle with China, Iran, and Russia on the world stage, both parties (the U.S. and the EU) would seek strategic advantages in a more secure and affluent region. The three powers in the trade route are likely to choose collaboration and acceptance over the competition since their strategic capabilities are stretched too thin, and the corridor is unlikely to be utilised to restrict or isolate any of them. There is every reason to believe that Russia, China, and Iran will keep using “grey zone” strategies and soft power to sway the regional political landscape in their favour.
The Three Seas Initiative in Central Europe, a public-private infrastructure development organisation that seeks to expand beyond EU-member states, could be one obstacle to the route’s future expansion. If it succeeds in developing a “four seas” programme, it might facilitate projects across the Caspian Sea.
SCRAMBLING FOR ALTERNATIVES
As Europe gears up for a long cold winter, will its geopolitical equations change?
SYNERGIA FOUNDATION
RESEARCH TEAM
By all counts, 2022 is a year best consigned to the dustbin of history as it has brought nothing but misery to the entire world. While for the small cartel of energy exporters, it was no doubt a bumper year, for the majority of the world, especially the Global South, it piled on even greater miseries. The situation is especially grim for Europe, starved as it is from cheap Russian gas it had got so used to. Unsurprisingly, as a fierce European winter looms, energy security has become a top political priority for Europe.
WHAT ARE THE ALTERNATIVES?
Under pressure from the U.S., and with the cold war again threatening the European landmass, European states are faced with tough choices that will have long-term impacts on their energy security. While new energy sources are being intensively sought, long-term energy partnerships take time to mature.
Having woken up to the dangers of exclusive dependency on a single energy source, thanks to the irrationality of the war in Ukraine, in March EU came up with its REPowerEU plan. This is the European Commission’s ambitious plan to ensure the future of Europe’s energy future once it is entirely decoupled from Russian fossil fuels well before 2030. The plan combines diversifying the energy and increasing the use of renewables. tion of gas, oil and coal in the short term. The second pillar of the plan would be accelerating clean energy, which should be affordable and produced domestically. This would entail massive investments, which the member states should be prepared to commit. Towards this end, industries, especially the transport industry, must work towards reducing fossil fuel use at a much faster rate. Last but not least, a prosperous population, tuned to an uninterrupted supply of energy at a low cost, must learn to save energy. This can be achieved with minor behavioural changes already commonplace in the developing world, like preferring low-wattage devices and spreading the energy consumption peaks in urban areas throughout the day.
GEOPOLITICS OF ENERGY SECURITY
The EU’s energy security relies on its ability to secure additional and alternative energy supplies and its success in transitioning to renewables, energy efficiency, and energy savings. As traditional suppliers such as the Middle East appear tied up with capacity constraints and already existing commitments to countries such as China and India, new frontiers in North Africa appear a better bet.
The Mediterranean is also a region of strong prospect for the EU as they could offer short- and long-term options. Egypt and Israel have signed a Memorandum of Under-
standing for stable delivery of natural gas to Europe. These alterations might contribute to redefining world energy flows from the MENA region with a significant impact on the world’s geopolitical, economic, and energy dynamics.
THE FOCUS ON ALGERIA
The Mediterranean region is fast developing as a key energy platform where energy connections between the Middle East, North Africa and Europe are stabilising. As Russian sources run dry, Algeria has emerged as one of Europe’s major natural gas suppliers.
Algeria is Europe’s third-largest gas supplier. About 83 per cent of its gas exports head to Europe, with Spain and Italy as the top two destinations; together, they received 65 per cent of Algeria’s gas exports in 2021. Algeria exports gas to Spain and Italy via pipelines and oil tankers from two liquefied natural gas (LNG) plants. Over time, the country has played a critical role in Europe’s gas balance as the third-largest supplier after Russia and Norway, providing 10 per cent of the continent’s imports. This has greatly benefited Algeria in weathering the economic collapse that its critics were forecasting after the political turmoil in the country.
There are currently two active pipelines connecting Algeria to Europe-the TransMed undersea pipeline to Italy and the MedGaz undersea pipeline to Spain. MedGaz’s capacity is set to increase further, a fact that was highlighted during discussions with Spain in the lead-up to the closure of the Maghreb-Europe gas pipeline after Morocco and Algeria failed to renew their transit contract.
Algeria’s main challenge in increasing exports is production capacity. The country’s oscillating gas outputs have been a concern for Europe, and gas exports fell in 2022 after a record output in 2021. While flows to Italy have risen slightly, those via a pipeline to Spain and Morocco have dropped. So far, therefore, Algeria’s contribution to replacing Russia has largely been limited to cutting overall exports while switching supplies from Spain to Italy.
This shift could work for Europe as Italy remains heavily dependent on Russia, with almost all of its gas coming from the region. On the other hand, Spain has a surplus LNG import capacity and maintains limited connectivity with the continent.
Geopolitically, Algeria is fiercely independent and is in a strong position to deal with Russian objections, despite a strong military relationship with Russia that goes back into history.
On the flip side, the country has long been accused of underinvestment, unattractive fiscal terms and painfully slow bureaucracy, hampering hydrocarbon sector development. This could change with investments worth over $4 billion flowing in after a new oil law was passed in 2019, attracting big players like Italy’s ENI, France’s TotalEnergies and U.S.’s Occidental. A new gas field discovery at Hassi R’mel is expected to add another 3.65 bcm of annual production by the end of this year, a very favourable timing for Europe.
Any meaningful increases in Algerian production will require years of exploration and development and, more crucially, further energy industry reforms to at-
We are in need of partnerships and also funding to make our role meaningful. Energy projects require intensive investments over a long period.”
Source : The Week
With ample sunshine and vast open areas, renewables provide another game-changing option for Algeria to exploit. Germany, a leader in renewables technology, has partnered with Algeria to explore the latter’s green hydrogen potential. GIZ, the German development agency, in a 2021 study, claimed that “ the country can produce a lot of electricity from solar energy that is needed for the production of green hydrogen,” using energy conversion and storage pathways that use surplus electric power from renewable energy, typically solar and wind. Algeria is also in a good position to harness its oil and gas expertise and gas pipelines, which could transport hydrogen following some technical adjustments.
DIPLOMATIC CHALLENGES
In a classical “rob Peter to pay Paul” move, Algeria is balancing its commitments to Italy at the cost of Spain. This will require a combination of smart diplomacy and concessions on the part of Spain for Europe to coax as much energy as possible from the Sahara.
Algeria’s relationship with Moscow is a growing concern based on its strong non-aligned stance. Algeria is a country which prioritises foreign policy independence and is attempting to strike a delicate balance in boosting energy exports to EU countries while maintaining its defence relationship and strategic partnership with Moscow.
On its part, the EU will need to work out timely decisions, long-term commitments, and a broader vision to increase ties with the Western Mediterranean. The southern part of the Mediterranean, in particular, is rich in oil and gas reserves.
Italy has also made additional deals with Egypt, and along with Algeria, the two North African countries now hold the largest proven gas reserves in the area, even ahead of Libya.
Algeria is not the only country in focus. The Eastern Mediterranean region is experiencing significant changes with the US-sponsored reintegration of Turkey into the regional energy system in recent months and momentous discoveries off the coasts of Israel, Cyprus, and Egypt during the last decade.
Summing up the challenges, Mr Nadim Abillama, MENA Programme Officer at the International Energy Agency (IEA), says, “The region is currently unable to fully provide a substitute to the volumes imported from Russia, at least when it comes to oil and gas, but can make important contributions if producers fully leverage existing infrastructure, like LNG terminals in Algeria and Egypt and pipelines in Algeria and Libya.”
Assessment
Europe is not alone in its search for energy alternatives. Globally, the fragility of energy security has imploded, demanding innovative solutions and renewed partnerships. Energy occupies the centre point for most conferences and negotiations.
In its search for energy security, Europe must explore all options, including a switch from fossil fuels to renewables. While this change is desirable, it will take time and is not an immediate solution for Europe’s woes. Diplomacy must be harnessed to manage the complexities of politics and culture.
The energy transition is in place. Last year, 81% of new installations were in renewables. In the MENA region, there is no doubt that producing energy through renewables is the most competitive. There is a need to develop infrastructure - physical, financial, legislative, distribution to make this effective transformation.”
FRANCESCO LA CAMERA, Director-General, International Renewable Energy Agency (IRENA)
