One major objective of contemporary Nepal has been to reduce the land-locked Himalayan country’s total dependence on India and establish solid economic and military ties with China.
The present government also pursues that strategy but without spoiling the relationship with its western neighbor India. Nepal has sealed an agreement on transit rights through China that would considerably reduce it’s over dependence on India.
Nepal’s new Prime Minister KP Sharma Oli embarked upon his first visit to China on March 20 to strike transit rights and economic deals with Beijing. Oli arrived in China on March 20 and the two sides signed 10 agreements including for a transit treaty and rail links during his talks with his Chinese counterpart Li Keqiang. The transit treaty reduces landlocked Nepal’s dependence on India as it sources most of imports and exports through Kolkata port.
Nepal looks to source its supplies through the arduous Himalayan route through Tibet, which many analysts say will be an expensive proposition for Nepal considering easy proximity through the Indian border. During the recent Madhesi agitation, Prime Minister Oli and other leaders had alleged that India had imposed an undeclared blockade on Nepal to back the Indian-origin Madhesis. India had firmly denied imposing the blockade.
Nepal, like Bangladesh, Sri Lanka and Afghanistan that, though have good neighborly relations with economically militarily sound South Asian super power India, understand India’s desire to dictate terms to these nations and, therefore, do not try to annoy their big brother living with big ambitions. For instance, Sri Lanka is facing a serious war crime probe by international court and without Indian support Rajapaksha and team would be in jail, at least for their crimes against humanity, killing numberless Tamils on the island nation.
International community treats the Rajapaksha military genocides in Tamil localities, in fact trying for genocide. Although incumbent president Sirisena is duty-bound to punish the anti-Tamil criminals he is seen to be trying to save Rajapaksha from punishment for his own crimes. Sirisena-Rajapaksha duo continues to block any international investigation into Lankan war crimes and push for local investigation so that the “issue” is killed by their Singhalese judges who would save themselves from intentional insult by shielding the military crimes.
Bangladesh similarly has past experience with Indian “actions” tries best not to offend the big brother even from a distant. Though the government is inclined to be pro-Indian regime, media have enough freedom to express themselves even against the Bangla government, unlike Nepal and Sri Lanka where state control over media is absolute, even unlike in India.
Nepal knows well that by direct confrontation with India in any manner, it would have to suffer in some ways, notwithstanding support from Beijing. Hence it is very cautiously pursue a balanced foreign diplomacy. Like in Sri Lanka, neither the officals nor the core media criticize India or its policies even against others and domestic failures. They only say or write something about India only to praise it “gracefully”
Oli’s visit to China has been a subject of speculation since he came to power in October 2015. News reports had suggested that the visit to China may include landmark agreements on border trade and extradition of wanted criminals. Reports said Oli would also conclude agreements on building of multiple train routes connecting Nepal with China’s key production centres.
Strongly defending ties with China, Sharma Oli on March 20 Nepal’s Prime Minister Oli said Nepal wants good relations with both China and India to draw “developmental benefits” for the Nepali economy. “Nepal is smaller in size and has limited resources. We have to benefit also from the developmental activities in the neighbouring countries. We don’t want to fight with any country nor do we want to distance ourselves from any of our neighbours. We are a small country seeking development of our people,” Oli said in a TV interview which was telecast a on an Indian channel, a day before he is scheduled to. Oli defended his policy with India indicating that New Delhi’s lack of support to the Nepali Constitution was due to “lack of mutual understanding” which was addressed during his February visit to India.
Underlining the growing role of China in South Asia, Nepal on 21 March secured transit rights through China following an agreement in Beijing between PM Sharma Oli and his Chinese counterpart Li Keqiang. China extended a ceremonial welcome to Oli who held official talks with the Chinese leadership.
However, playing down the impact of the agreements between Nepal and China, official sources said that the future of the agreements depended on the issue of “economic viability” of the transit facilities and train connectivity projects.
India at present has two rail lines under construction and three more are being planned to increase Nepal’s trade ties. The Indian ministry of External Affairs, however, refused to issue an official statement immediately, considering that the agreements were between two sovereign countries. Officials pointed out that in comparison to the Nepal-China agreement, India and Nepal had 25 crossing points, two integrated checkpoints and 2 more checkpoints were under construction. During the February visit of Prime Minister Oli to New Delhi, India agreed on giving dedicated access to Nepal to the port of Vizag.
However, officials pointed out that ‘India-Nepal ties’ could not be compared or curtailed by Nepal’s agreements with China. “After all, 98 per cent of Nepal’s third country trade goes through India and to the port of Kolkata,” an official pointed out.
Even as official sources played down the impact of the transit rights through China, Nepal PM Oli clinched the proposed agreements for rail connectivity with his Chinese counterpart Li Keqiang in Beijing – the development, for India, represents a challenge not just for India but for entire South Asia. China would have to ponder about how it could implement a rail and transit agreement for Nepal without opening up the Tibet region to the world. Rail connectivity from Nepal to China would be used by the non-Chinese to travel to China through Tibet.
The agreements, however, will take some time before being implemented on the ground and political developments may impact the deals concluded. However, the implementation of the deals would depend on how far China was willing to invest in Nepal considering the economic and political risks associated with the deals.
The five month-blockade on the Nepal-India border which ended in February, “pushed Nepal to open its northern borders with China for transit trade. Historically, the Himalayas were seen as barrier but now the Himalayas can be a connector between Nepal and China, underlining that transit and train agreements to create new dynamics in South Asia.
Nepali Minister for Supplies, Ganesh Man Pun declared that Oli’s visit would lead to the conclusion of a bilateral agreement on fuel supply from China. Pun also announced that the Chinese government would build fuel storage depots in three locations in Nepal for which plans have begun.
Nepal’s expanding relations with China should not “irritate” India, a senior leader of the ruling Communist Party of Nepal (Marxist-Leninist) said on Friday, asserting that Nepal would not accept anyone’s “hegemony”. “We want to establish relations with both the neighbouring countries (China and India) on the basis of equality, which should not cause irritation to any of the countries,” said Pradip Gyawali, a Central Committee member of the party. “As an independent and sovereign country, it is upto Nepal to decide what type of relations we want to maintain with which country, and we will not accept anyone’s hegemony,” he said talking to journalists in Banke district of western Nepal.
The ruling CPN-UML hailed the agreements inked by Nepal with China during the ongoing visit of PM Sharma Oli. “These bilateral cooperation deals are highly significant which help achieving long-term socio-economic development goals to Nepal on its own,” the CPN-ML said in a statement. The deals have opened new gateway for diversifying Nepal’s trade, the party said underlining the need for a swift implementation of these accords. “The bilateral deals reached between the two countries on trade diversification, cross border connectivity, infrastructure development, investment, reconstruction, energy, tourism and business have a long-term significance for Nepal’s socio-economic development,” the party said.
However, Nepal could not seal a vital fuel supply agreement with China which Nepali sources said would also come up for detailed discussion during the seven-day visit of Oli to China.
The dynamic of Chinese Premier’s visit to EU headquarters
In the wake of Chinese Premier Li’s attendance at the meeting of the Council of Heads of Government of the Shanghai Cooperation Organization in Dushanbe, he and his entourage started the third stop of their Eurasian trip in which Premier Li also attended the opening ceremony of the 12th Asia-Europe Meeting summit in Brussels, the Capital of the European Union. In view of the strained relations between China and the United States over the past months, it is clear that China aims to intensify the partnership with the EU.
This year’s summit on the theme of “Europe and Asia: global partners for global challenges”, was attended by the leaders from over 50 Asian and European countries and representatives from international organizations. As Nicolas Chapuis, EU’s envoy to Beijing, remarked that it was a meeting of minds, all looking for ways to better safeguard a rules-based international order, at a time when globalization is under attack. Given that the general context where globalization is in question, China has equally faced new challenges globally. For sure, it is necessary to further work between China and the EU to bring stability, and to bring prosperity to both sides and beyond.
As the EU has aimed to play a civilian power rather than a conventional great power, China and the EU have vowed to address climate change and international developments which are two areas where China and the EU have a great deal of potential to work together and actually have cooperated substantially in addressing climate change, poverty alleviation, access to water, small and medium businesses and surely education for young women. Both the Netherlands and Belgium are the advanced member states of the EU and the original founding states of the European Common Market. In addition, they have argued for high importance on developing their relations with in all areas of agriculture, energy, infrastructure and connectivity which must be carried on under the United Nations framework. It meant that China and the EU have concluded the consensus on upholding multilateralism and common development. It is held that the treaty signed on October 18will help China and the EU further open to one each other and eventually contribute to forging free trade and fair cooperation on investment between the two sides.
EU, as the largest economy of the world, believes that the future of peace, security, stability, and prosperity lies in the multilateral framework. Due to this, it is imperative for the EU and China to continue their persistent efforts in upholding the spirit of the 2015 UN’s Climate Change Conference, and finding creative solutions to the challenges facing the world right now. As what the summit meeting between Li and European Commission President Jean-Claude Juncker demonstrated that our global village is the place only where we can live, the time of closed borders is the past. The future is open borders.
Besides climate change and international development, what China would like to achieve from its Premier’s visit to the EU is self-evident: China, as a rising power and also the defender of the current trade rules and the global system, has reiterated its sincerity of peaceful rise. By approaching to the EU, China aims to demonstrate its willingness to protect intellectual property rights for products from the EU alongside other countries. Equally, the two sides have reached the EU-China Comprehensive Agreement on Investment, which would further open market access for companies as well as set rules to protect investors from both sides.
For sure, trade is still a pivot in China-EU relations and has to be held through negotiations and cooperation. As the birthplace of modern diplomacy which highlights the core concepts of negotiation, persuasion and mutual compromise if necessary, EU and China would be comfortable to work together through more dialogue and joint actions in addressing challenges and pressing issues facing the world today, such as trade frictions and reform of the World Trade Organization.
Moreover, spurred by the protectionist voices in Washington, the July EU-China summit in Beijing was significant in that both sides were able to agree a lengthy statement, something that they could not achieve in the two previous EU-China summits. To that end, when both sides sought to emphasize areas of cooperation rather than divergence, they also expressed support for the rules-based multilateral trading system and agreed to set up a working group on reform of the WTO. Both sides also agreed an exchange of market access offers that should give an impetus to the ongoing negotiations for a bilateral investment agreement. Moving these talks towards a conclusion would be of critical importance in preserving free trade. China confirmed its commitment to acceding to the WTO Government Procurement Agreement (GPA). In brief, both sides have discussed connectivity — taking stock of progress in the EU-China connectivity platform — and exchanged views on the digital economy, including how to avoid introducing market access barriers through their respective cybersecurity regulations.
In addition to business and investment, China, as both a rising power and a developing country as well, has been early keen in the advanced technology and innovative learning as well. For example, Premier Li frankly said that China is willing to further enhance cooperation with Belgium in innovation and high-technology under the principle of paying full respect to law and commitment from both sides. Therefore, the cooperation in technology and innovation as well as safe use of nuclear energy were among the topics of the meetings of Chinese Premier with his host countries. Remembering that advanced technologies from the EU will have great market potential in China, and China will give strict protections to intellectual property according to the essential rules and a rules-based international order and free trade.
The EU has now come out with its own connectivity strategy for linking Europe and Asia with an emphasis on sustainability and transparency. Some have viewed it as a response to China’s Belt and Road Initiative. But given the demand for new infrastructure development, there is a clear need to help countries between Europe and Asia improve their economies.
Even though we have different perceptions of some of the world issues, Chinese are optimistic about their relationship with the EU. Not long ago, however, there are complaints that the EU has reneged on a promise to grant China market economy status and its growing protectionism. China considers the proposed screening of Chinese investments in the EU as an unfriendly act. Although the EU and China have signed impressive documents outlining their mutual desire to deepen their strategic partnership, relations have rather stagnated over the above trade disputes. Yet, majority of Chinese young people and intellectual elites have looked to the EU for the originality, innovation and creativity.
Geographically far off from each other, the EU and China can understand each other from their experiences in history. Particularly, China holds fast that since it is a key part of the family of civilized states, Chinese thought or culture, the principles at the basis of Chinese history and life, must be understood through regular communications and dialogues at all the levels. This is the nature of Chinese Premier Li’s visit to the headquarters of the European Union.
Twists and Turns in US -China Trade War
US Secretary of State Mike Pompeo’s stopover at Beijing on 08 October may not have been a pleasant experience, more so in the backdrop of accusation of US Vice President Pence about China attempting to interfere in U.S. elections. The agenda of North Korean denuclearisation, where US and China were broadly agreeing earlier, seems to have taken a back seat, and improvement of relations doesn’t seem to be realistic in near future. The ongoing trade war continues as both sides dig their heels despite being the biggest trading partners of each other, because it is also linked with global dominance, strategic and military posturing, diplomatic and information offensive.
China Braving Threat to its Vulnerabilities
China is putting a brave front despite being badly hit at some of its most vulnerable spots in the tit-for-tat trade war with both sides spiralling the slapping of tariffs on a wide range of each others’ trade items. Taiwan, which is another sensitivity of Beijing is witnessing visit of US officials after Taiwan Travel Act was signed by President Trump, with a promise to arm it further with latest weaponry. US continued military posturing in South China Sea, along with the appearance of UK warship ignoring Chinese repeated warning is another concern. A recent injection of over $110 billion by China into its banks and hardly any financial benefits coming out of BRI partners incapable to repay anything is tightening its financial freedom for global dominance. Some of its BRI partners want to get out of the ‘Debt Trap’ by refusing/reducing Chinese investments is adversely affecting Chinese dream project (BRI), after five years of its announcement like Philippines.
Not a Smooth Sail for US
US on the other hand cannot be celebrating either, with China digging it heals and refusing to give up either in trade war or South China Sea. On North Korean front, the policy of good optics continues with Kim managing to get a lot of goodies from South Korea (presumably at their cost), during the last summit of North and South Korea. Kim in fact has been an outright winner, managing to get another Summit with President Trump, which helps him in convincing his countrymen of his sound leadership, as well as boosting his status internationally. US sanctions on paper continue, but after the chest thumping at Singapore Summit, his friends like China automatically relaxed the sanctions on North Korea, without any worthwhile denuclearisation/reduction in his nuclear/missile arsenal. US realises that knocking out China financially is the key to its global dominance; hence is unlikely to soften up to China. US also faces another challenge of keeping its allies like Japan and South Korea satisfied while negotiating with North Korea and asking ASEAN to make choices of partners, besides continuing with CAATSA hurting some of its strategic partners who could be helpful in balancing China.
It will take some time to see that whoever has greater resilience to withstand the economic stand-off and appetite to take setbacks will have an upper edge, which seems to be US at this point of time. As per IMF assessment, China’s GDP size will be 1.6 per cent lower in 2019 than it otherwise would be, if the US slaps tariffs on all Chinese imports.
How is India affected?
The Indian economy has survived some global slowdowns earlier and should be able to sail through the present one. The bigger problem is the sanction under CAATSA in dealing with Russia for urgently needed military hardware like S-400 and Iran for cheaper crude oil being paid in rupee terms, for which India has adequate refineries. The US option of buying shale oil does not suit India as it does not have adequate refineries and will have to purchase finished product in dollar terms. The port of Chabahar is also crucial for India for connectivity to Afghanistan and CAR. The silver lining is that US being our strategic partner will like to have well equipped Indian Forces to balance China and Indian connectivity to Afghanistan, in case Pakistan does not serve their strategic interest. On both counts I am hopeful that US will find a way out not to hurt its strategic partner.
The talks held in September 2018 between Kim Jong-Un and Moon Jae-In
In less than one year three meetings have been held between the North Korean Leader and the South Korean President, Moon Jae-In.
In the initial meeting the two leaders had decided to put an end to the state of war between their two countries. They had also reaffirmed the goal of denuclearization of the entire peninsula, with the consequent destruction of the nuclear potential of South Korea and of the United States, in particular. They also decided to create an inter-Korean Liason Office between the two sides of the Demilitarized Zone and to bring together the families dispersed between the two Koreas. Finally, the idea was to create new communication infrastructure – railway lines, in particular – a project by which Russia has always set great store.
Indeed, Russia is betting many of its cards on a reunification between the two Koreas, capable of enabling it to keep its excellent relations with South Korea – which are essential for the economy – and to also support North Korea, which is Russia’s unavoidable strategic goal.
Now the two Koreas are dealing on their own, without the US brokerage and intermediation with respect to South Korea, although President Donald J. Trump has recently stated that President Moon Jae-In is his official “delegate” for the denuclearization of the Korean peninsula.
The United States is scarcely interested in the internationalization of the North Korean economy. It only wants denuclearization, while Kim Jong-Un wants denuclearization to develop his country’s economy and maintain its geopolitical and national autonomy.
A serious problem – both in talks and in the final or working documents – is also to define an effective mechanism to check denuclearization.
Indeed, between September 17 and 19, 2018, the signing of the Joint Declaration of Pyongyang has not fully clarified the mechanism of checks on the denuclearization of the Korean peninsula. Kim Jong-Un’s idea is to organise these checks with a series of “experts” appointed by the friendly powers, while the South Korean idea is to accept the maximum possible denuclearization to start the long process of reunification.
The two respective Defence Ministers, however -namely Song Young Moo for South Korea and Rho Kwang Chul for North Korea – have just signed a separate document from the rest of agreements.
In that text confidence-building measures between the parties are put first, with North Korea’s acceptance of dismantling a launch pad and a site for checking jet engines, with the presence of yet unspecified, but friendly international experts. From IAEA? We have some doubts, in this case.
Subsequently North Korea could also dismantle the Nongbyon site, if the United States does the same in South Korea.
It should also be recalled that most North Korean missiles are built to be launched by mobile vehicles, not from fixed bases.
In short, North Korea wants the United States to remove the nuclear umbrella protecting South Korea and Japan while, in the recent talks with North Korea, the United States thinks of a bilateral treaty regarding only the Korean peninsula and, at most, some classes of North Korean missiles.
In the US mind, the planned reduction of North Korean long-range missiles could be even equivalent to a nuclear and conventional decrease of its troops stationed in Guam.
On the basis of a new future agreement, both Koreas (and God only knows how and to what extent the North Korean conventional military potential would be useful for a South Korea unified with North Korea) would also define maritime and land buffer zones, as well as a no-fly zone over the old border, with a view to avoiding clashes or accidental air battles.
This is already partially clear, but much work shall be done to define all the details.
There would also be plans to cover or reduce artillery batteries along the coast.
Obviously, should these talks run aground, the only concrete political result would be the progressive divergence between South Korea and the United States, precisely on the problem of the peninsula’s denuclearization.
Furthermore, over and above the aforementioned sites, North Korea will dismantle the site of Dongchang-ri, in addition to the site of Yongbyon, while Kim Jong-Un is also very interested in the building of fast railway links between South and North Korea.
The two Koreas will get the industrial site of Kaesong back in shape and the old tourist project concerning Mount Kumgang back in track, besides planning new joint economic and tourist areas.
The inter-Korean agreement regards also collaboration for medical and environmental issues, as well as for the protection from epidemics.
In other words, both Koreas think of an economy of compensation between them, which could also develop at a later stage and become a need for the development of both countries.
An economic-political symbiosis that could get the United States out of play and later reinstate Russia, which is increasingly interested in the South Korean economy, as well as finally favour China, which has no intention of leaving the Korean peninsula to the hegemony of North Korea alone.
At the end of the Treaty, there is also the project of a joint participation in the Tokyo 2020 Olympic Games and a joint candidature for the 2032 Olympics.
A few days ago, North Korea also expressed its intention to join the International Monetary Fund and the World Bank – a sign that the internationalization of the North Korean economy is now a certainty.
Hence it is a de facto peace treaty between the two Koreas.
If North Korea continues along this line, it is very likely that South Korea will gain a tactical advantage over the sea while, if the relations between South Korea and the United States remain as they currently are, there should be no significant changes in bilateral relations between the USA and South Korea.
However, what is the current state of relations between the United States and North Korea?
In fact, while the inter-Korean relations are all in the framework of effective confidence-building measures, the clear purpose of the fourth round of talks between the two Korean leaders is to preserve a strong US engagement in the whole negotiation process.
Kim Jong-Un wants to engage the United States for his global economic projection and he certainly does not want to remain tied to a regional economy, albeit open and “reformed” according to China’s rules.
For North Korea, the procedure is simple: at first, bilateral talks with the US support for South Korea; later peace between the two Koreas and finally what is only interesting for the USA, namely denuclearization.
It is not even unlikely that the United States does not accept this timing, but it is also unlikely that it realizes the strategic and economic aspects of this timing.
North Korea wants a fundamental agreement with South Korea because: a) it is an unavoidable asset for the modernization of its economy; b) it is the fundamental strategic factor to have the support of both Russia and China, who want to avoid North Korea’s hegemony over the peninsula, but also want to keep it as a rampart for US forces in South Korea; c) it is only through South Korea that North Korea will eventually be in a position to be connected to the Chinese maritime economic and strategic system and reach up to the Mediterranean.
In fact, if the relations between the United States and North Korea improve further, the site of Yongbyon could be dismantled definitively.
Hence currently Kim Jong-Un wants to thoroughly test the US goodwill, rather than South Korea’s goodwill, in developing a long or very long-term peace policy.
In Kim Jong-Un’s mind, there is in fact a key factor: the US behaviour in the phase in which Muammar Gaddafi accepted its proposal to dismantle his nuclear project.
Kim Jong-Un thinks that not even the story of Saddam Hussein is a guarantee for the US long-term reliability and for the stability of its leaders’ word of honour.
This is the real important factor in the strategy of the North Korean Leader.
Moreover, the US immediate reactions to the last meeting between the two Korean leaders have been fast and positive, both by President Trump and by Secretary of State Mike Pompeo.
And North Korea’s autonomous foreign policy has been seen also recently, with the 70th Anniversary military parade.
North Korea’s military parade and its important national celebration, was attended by Li Zhansu, ranking third in the internal power hierarchy of the Communist Party of China (CPC); by Valentina Matviyenko, President of the Russian Federal Council, the third elected office in the Russian Federation; by a very significant figure, Mohamed Ould Abdel Aziz, President of Mauritania, and finally by Hilal al Hilal, deputy-General Secretary of the Syrian Baath Party.
With peace, North Korea will significantly develop its already multiple economic and political relations with Africa, which will be essential for its new economic development.
At the military parade staged on September 9, there were also authorities from Iran, South Africa and Singapore – which is the never forgotten model of the Chinese “Four Modernizations” -as well as other 60 delegations from “friendly” countries.
At economic level, in August, shortly before the big military parade of the 70th Anniversary, there was the International Fair of Razon, which hosted as many as 114 companies of which 52 North Korean ones.
The North Korean product lines mainly included pharmaceuticals, foodstuffs, textiles, electronics and cosmetics.
However, there were many Chinese large companies selling their products in North Korea despite the UN sanctions.
As from September 17, there was also the Autumn Fair which brought together 320 commercial companies from Russia, New Zealand, Australia and China.
This is in fact the new paradigm of North Korea’s foreign policy.
The dollar has also grown in the exchanges with the North Korean currency, both on the official and on the “parallel” markets.
If all goes well at geopolitical level, the North Korean project will be to further improve its light industry, in addition to the diversification and quantity of products, with a view to trying its own autonomous way on the market world, as was the way of the nuclear system.
It should be recalled that this was also Kim Il-Sung’s project.
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