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East Asia

Hotbeds of War II- Arms and Sanctions: U.S.A. and North Korea

Osama Rizvi



A hermit kingdom where government officials flatter their leader with odd songs. A lady in pink, in an enthusiastic tone, announcing some “successful” missile test or the video of the test it-self is the most we get to see of it. North Korea is a different country. Criticism and sanctions has done little to stop its ambitious nuclear program.  

While discussing the conflicts that can lead to an all-out war, the one between North Korea and USA is the most unstable and dangerous one. Time and again, tensions had escalated between the two but the world has been fortunate enough. However, this is not a solution. The conflict can best be described in terms of a volcano that can erupt at any given time.

Even the slightest spark between the countries send ripples across the world. Because the stakes are high, very high. The point of discussion is nuclear. The men concerned, capricious and hence, dangerous. Strings connect other countries and drag them inside most of the times, unwillingly (China is an ally of North, Russia hosts the greatest number of North Korean workers and South Korea looks to USA for help, with thousands of US troops stationed there). Despite sanctions and international criticism North Korea continues to conduct nuclear experiments, blatantly degrading Non Proliferation Treaty. This year the country conducted 18 missile tests. In an attempt to quenching their thirst for nuclear pyrotechnics, they tried a hydrogen bomb as well.

On August 29, 2017, North Korea launched a ballistic missile that flew over the Japanese island of Hokkaido and fell into the Pacific, 1180 km east of Japan. Proving inured to international flak and ire, on September 14th, 2017, the regime launched another missile that followed the same trajectory: flying over Hokkaido islands dropping into Pacific Ocean. This was just after the KCNA, news agency of North Korea, released a statement threatening to sink Japan into the sea. South Korea responded by a fire drill. Japan was on high alert. Evidently, the second test was a reaction to the recently imposed sanctions on North Korea. (See image below).


Japanese Prime Minister Shinzo Abe has reprimanded North Korea in a stern manner, conducting emergency exercises in Japan teaching people how to evacuate in case of a strike. Mr. Trump has also said that “all options are on table” to deal with DPRK.

By a scrupulously observing the intricate geo-political milieu of the said region one can easily see that there are more than two stake-holders in the game. North Korea shares a border with China. Also, China is the biggest trading partner of the former. Whereas South Korea is a US ally. Both China and USA wants to have a strong hold in this region given the magnitude of international trade and tanker traffic passing through it. South China Sea (which would be analyzed in the last part) is the most disputed and significant area, which is located in this region. China is not happy with their naughty neighbor but acting against the country to an extent that it becomes unstable is not an option. Hence, their balking in adopting a complete oil embargo. If this happens there can a huge outflow of people which will, naturally, enter China…disturbing and disrupting the socio-economic order there. Also, in case of a total economic collapse of North Korea, South can takeover it which in turn will give US an opportunity to “contain” China.

Evidently, there are financial dimensions to it as well. Mr. Mir Mohammad Ali Khan, Wall Street Investment Banker and Chairman of an Advisory Company, shared a very comprehensive view of the financial repercussions of this conflict

“We are about to see an Asian Financial Crisis bigger than 1997 and become a contagion which will make 2008 crisis look like a joke. Mr. Trump without realizing the financial implication of his threatening tweet(s) has promised to sanction banks doing business with North Korea and cut off “All” trade ties with countries doing business with the North Koreans.

The problem is Trump threatening to put sanctions on all financial institutions doing business with Kim Jong’s nation. China is the biggest trade partner of North Korea. 85% of the North Korean trade goes through China. What Trump forgot to realize that the four lenders of China are the biggest in the world. Bigger than JP Morgan. HSBC. Or any other bank in America. The Industrial and Commercial Bank of China has assets over $ 3.47 trillion dollars. China Construction Bank over $2.8 trillion dollars. Agricultural Bank of China and Bank of China, $ 2.93 and $3.02 trillion respectively. And all these banks do business with North Korea. While JP Morgan comes in at the 6th place with $ 2.49 trillion in assets and HSBC at 7th place with $ 2.37 trillion dollars. Another noteworthy fact is that the size of the Chinese lending pool has surpassed the entire Euro Zone lending pool. At above $33 trillion dollars. If Trump does what he is promising to do, to put sanctions on any financial institution doing business with the North Koreans, then we will see the world’s biggest financial crisis. Something which will even dwarf the famous 1929 market crash. This will be a crash of the entire financial sector of the world.

Secondly if America breaks all trade ties with China then China will immediately en-cash what it has in United States Treasuries, or what is better known as the American debt, which is 4% of the entire American debt of $19 trillion dollars. If China liquidates almost a trillion dollars of its holdings in the treasuries, the American debt market will crash and it will cause the European Debt market of €13 trillion to crash with it. It’s a wait and see approach at this moment….economic WORLD WAR ONE is in the making. Trump is caught between the Devil (himself) and The Deep Blue Sea. I hope the devil gets his senses back and listens to his advisors.”

Matters are made worse when the leaders on both sides are what they are: unpredictable. If Kim is a dangerous man, Trump is amateur politician. With the hope that things won’t move towards a military action, that would be unimaginably destructive, we can hope for more stringent sanctions that can put a kibosh on any further nuclear plans subsequently preventing escalation.

However, the response from North Korea, after the imposition of recent sanctions, is symptomatic of the regimes’ obstinacy in pursuing its nuclear program. Korean regime may be inured to criticism but had to be stopped at some point. Otherwise, they can be a cause of unnecessary turmoil, for themselves, and for the whole world as well.

Independent Economic Analyst, Writer and Editor. Contributes columns to different newspapers. He is a columnist for, where he analyzes Crude Oil and markets. Also a sub-editor of an online business magazine and a Guest Editor in Modern Diplomacy. His interests range from Economic history to Classical literature.

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East Asia

Belt and Road Initiative and China-Iran cooperation

H.E. Mr. Pang Sen



Over the past two weeks, the National People’s Congress of China (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) were held in Beijing, China. In addition to reviewing policies relating to crucial domestic economic and social developments, the gatherings also decided on the amendment of the Constitution, election of new leadership of the state, reform of governmental structure as well as legislation on anti-corruption matters.

During the above meetings, foreign policy of China, the Belt and Road Initiative in particular, attracted attention around the globe. Proposed by President Xi Jinping in 2013, the Initiative aims at promoting pragmatic cooperation and joint prosperity among participating countries. It emphasizes the principles of openness, inclusiveness, commercial-oriented operation, mutual benefits and win-win outcome. President Xi Jinping, Premier Li Keqiang and other high-ranking Chinese officials have, on different occasions, stressed that the Initiative does not exclude or oppose anyone. It is open to all and everyone could join and work together as an equal partner. Just as Mr. Wang Yi, the Chinese Foreign Minister explained, the Initiative is a transparent process. It follows the “golden rule” of extensive consultation, joint contribution and shared benefits. Its projects are discussed, planned and implemented by participants in the open. No country is to dominate the process and all parties have an equal say.

The Initiative is not a mere restoration of the ancient silk road by which merchants, artists and common folks drudge for thousands of miles on camel backs in pursuit of fortune and better lives. While envisaging the usage of up-to-date means of transportation to facilitate physical connectivity of participating countries, the Initiative also encourages the discussion of institutional connectivity so that the policies, rules and standards of participating states could be formulated in a more scientific way and garner higher economic returns for all. Importance is also laid on economic, social, fiscal and environmental sustainability of projects.

Thanks to the open approaches and unremitting efforts by all participating states over the past few years, the Initiative has witnessed encouraging progress. The Belt and Road Forum for International Cooperation held last May in Beijing attracted some 1500 representatives from over 130 countries and 70 international organizations. The turnout itself is an evident vote of confidence by the international community. On top of that, more than 80 countries and international organizations signed cooperation agreements with China.

As for China and Iran, the two countries have enjoyed profound friendship for thousands of years. Being a historical hub of trade and transport along the Silk Road, Iran has been a key partner within the Belt and Road framework. At present, the development of China-Iran relation maintains very good momentum. In 2016, President Xi Jinping made a successful visit to Iran, during which the two heads of state agreed to establish comprehensive strategic partnership. A bilateral MOU on jointly promoting the Belt and Road initiative was also signed by the two Governments. Since then, the cooperation between China and Iran has made marked headways.

Today, commonalities of development priorities bring our two countries even closer. The 13th five-year plan of China, the 6th five-year development plan and the Resistance Economy Policy of Iran all focus on the enhancement of domestic development. The two countries’ exchanges on microeconomics policies, bilateral trade and investment practices are making steady progress. China remained as the largest trading partner of Iran. In 2017, the bilateral trade volume exceeds 37 billion USD with year-on-year growth of 19%. The Tehran metro line 1, 2, 5 and the north extension of line 1 were all constructed with the participation of well-known Chinese enterprises which have maintained good records for safe operation. The Tajrish metro station of line 1 has thrived into the largest of its kind in the Middle East. The Tehran-Isfahan high-speed railway, with the top speed of 250KM/H, is the first one to be built in Iran. Its construction will create more than 100,000 jobs. Once completed, the trip between Tehran and Isfahan will be shortened to a little more than one hour.

The North Azadegan and Yadavaran oilfields, jointly developed by China and Iran with contract value of more than 5 billion USD, initiated commercial production in 2016 and respectively reached the peak of 75,000 and 100,000 barrels of crude oil per day. The CNPC has expressed its readiness to join the development of South Pars gas field, while the SINOPEC is in the process of constructing Iran’s biggest oil refinery in Abadan. The Chery MVM, with its market volume of nearly 300,000 per year, has become the third biggest automobile company in Iran, after SAIPA and KHODRO.

The cooperation between China and Iran provided visible input to Iran’s economic growth, industry upgrade and employment. Such cooperation, featuring frank consultation and mutual benefits, helped to enhance understanding between the two peoples as well as mutual trust and support between the two countries. We should explore the past successful experience and work together for a better future so as to bring more benefits to our two peoples.

First published in our partner Mehr News Agency

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East Asia

Shooting an Own Goal: China’s Belt and Road funding terms spark criticism

Dr. James M. Dorsey



Steep commercial terms for China’s investment in infrastructure projects across Eurasia related to its Belt and Road initiative may give it control of key ports and other assets as recipients of Beijing’s largess find themselves trapped in debt. Yet, that comes with a risky price tag: potentially rising anti-Chinese sentiment, questioning of Chinese intentions, and a tarnishing of the image China is seeking to cultivate.

Cynically dubbed debt-trap diplomacy, multiple countries along China’s Belt and Road risk financial crisis. The Washington-based Center for Global Development recently warned that 23 of the 68 countries involved were “significantly or highly vulnerable to debt distress.”

The centre said in a report that eight of the 23 countries — Djibouti, Kyrgyzstan, Laos. the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan – were particularly at risk.

Djibouti already owes 82 percent of its foreign debt to China while China is expected to account for 71% of Kyrgyz debt as Belt and Road-related projects are implemented.

“There is…concern that debt problems will create an unfavourable degree of dependency on China as a creditor. Increasing debt, and China’s role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI (Belt and Road initiative) countries,” the report said.

International relations scholars Robert Daly and Matthew Rojanski noted in a separate report on a recent trip to the Russia, Kazakhstan and China intended to gauge responses to the Belt and Road initiative that Eurasian nations were eager to benefit from Chinese investment but wary of Beijing’s intentions.

“We found an eagerness to participate in projects that support national development, but deep resistance to any westward or northern expansion of China’s practices, ideas, or population… Neither (Russia or Kazakhstan) hopes that China’s power will increase with its investments.,” the scholars said.

Outgoing US Secretary of State Rex Tillerson echoed the centre’s concerns on a visit to Africa this month. China “encourages dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-sustaining growth, Chinese investment does have the potential to address Africa’s infrastructure gap, but its approach has led to mounting debt and few, if any, jobs in most countries,” Mr. Tillerson said.

China has sought in some cases to counter resistance by offering more concessional or, in the case of Pakistan. interest-free instead of commercial loans for some projects.

Nonetheless, China has used debt relief as a vehicle to gain control of assets. Tajikistan saw an undisclosed amount of debt written off in exchange for ceding control of some 1,158 square kilometres of disputed territory. Sri Lanka, despite public protests, was forced to give China a major stake in its port of Hambantota.

Djibouti, one of the eight countries most at risk and a rent-a-military-base East African nation that hosts a major US facility, is about to follow in Sri Lanka’s footsteps. Djibouti last month seized control of the Doraleh Container Terminal from Dubai-based DP World and reportedly intends to hand over its management to a state-owned Chinese company.

Marine General Thomas Waldhauser, the top US commander in Africa, warned that the consequences of a Chinese takeover “could be significant.” He said moves by China, described by the Pentagon as one of several “revisionist powers” that “seek to create a world consistent with their authoritarian models,” had prompted him to revise US military strategy in Africa.

For their part, Pakistan and Nepal withdrew last November from two dam-building deals. The withdrawal coincided with mounting questions in Pakistan, a crown jewel in Chinese geo-strategic ambition, about what some see as a neo-colonial effort to extract the country’s resources.

China’s seeming obliviousness to the potential impact on recipients and its own standing of its funding approach appears to be rooted in President Xi Jinping’s rewriting of history and spin on reality that threatens to become a self-fulfilling prophecy.

Launching Belt and Road in a speech in Kazakhstan in September 2013, Mr. Xi suggested that the initiative constituted a revival of China’s centuries-old relationship with Eurasia. “More than 2,100 years ago … (Chinese) imperial envoy Zhang Qian was sent to Central Asia twice to open the door to friendly contacts between China and Central Asian countries as well as the transcontinental Silk Road linking East and West,” Mr. Xi told his audience.

In Indonesia a month later, Mr. Xi reminded the country’s parliament that “Southeast Asia has since ancient times been an important hub along the ancient Maritime Silk Road.”

Messrs. Daly and Rojanski noted that the historic Silk Road was never centred on China and that it served both commercial and military purposes. “The term ‘Silk Road’ was coined in 1877 by a German geographer to connote the historic phenomenon of Eurasian trade rather than a particular route,” the scholars said.

They suggested that Eurasian nations had not forgotten that historically Chinese expansion westwards had often been violent,” a fact Mr. Xi chose to overlook in his projection of the Belt and Road initiative.

It was, moreover, not immediately clear “that China’s branding, cash, and ambition can overcome the uneven development, political and cultural diversity, age-old hatreds, and daunting geography” of the Belt and Road, Messrs. Daly and Rojansky said.

Mr. Xi’s projection of a China-centric world is reflected in the country’s media that positions the Belt and Road as a vehicle to cement the People’s Republic’s place in the world as well as Communist Party rule despite paying lip service to the principle of a win-win proposition.

Chinese ambitions are evident in its efforts to internationalize its currency, the renminbi, as well as the inclusion of elements of the Chinese surveillance state and the propagation of Chinese culture through local media in investment target countries, for example Pakistan. They are also apparent in the creation of special Chinese courts to adjudicate Belt and Road.

China this month announced the establishment of a new agency to coordinate its foreign aid program. The agency is part of an effort to project China’s global influence more effectively and increase Communist Party control.

Taking issue with the Chinese effort, the Washington-based centre suggested that China as well as recipients of Beijing’s largess would be better served if the People’s Republic adopted a multilateral approach to Belt and Road-related funding rather than insisting on going it alone.

Said Scott Morris, a former US Treasury official and co-author of the centre’s report: “The way forward demands a clear policy framework aligned with global standards, something that has been absent from China’s lending practices to date. Whether Chinese officials have the will to pursue this approach will be critical in determining the ultimate success or failure” of the Belt and Road initiative.

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East Asia

Ice Silk Road: From Dream to reality

Vahid Pourtajrishi



Authors: Mahdi Torabi*, Vahid Pourtajrishi

The history of Silk Road backs to thousands years ago. The aim of creation of this route was linking China to Europe through Middle East. Growth of Chinese enterprises and industries which was started since middle of 20th century increased the significance of expanding the link routes between China and Europe following expansion of China’s export to West. Silk Road seems to be the main option in such condition as an ancient route which has been designed and created for this purpose.

But the main existing problem on this way was existinglimitation on capability of the classic Silk Road for transportation of high volume of freight from China to Europe.

In fact, the issue of increase this capability was the essence of Xi Jinping’s initiation of his “One Road One Belt” Doctrine which was declared by him as one of the significant elements of Chinese foreign policy.

According to the Xi Jinping’s defined policy for the new Silk Road, this route has to be expanded to some new routes on the ground and sea.  But it has to be mentioned that China has not been the only state who follows Jinping’s policy toward Silk Road. Many of other states, especially those who are located on China – Europe rote try to increase role on this high interesting route.

Through these states, we can point to Turkey and Russia as the most important ones who have shown their will to participate highly in this project.

Turkey introduced its Baku – Tbilisi – Kars (BTK) Corridor to create a new Silk Road which connects Istanbul to China by passing Azerbaijan and Kazakhstan. Ankara’s initiation in introducing a new combined route was a revolution in the regional and intercontinental transport orders.

But beside of all defined merits for this route, some disadvantages like high cost of transport or existence of not suitable weather conditions for move of ships through Caspian Sea on winter. That’s why;relating released reports on establishment of BTK by Turkey and its partners created a shock among experts in international transportation.

While many of experts recognized this route as the last alternative for the classic Silk Road, Russia could come over its geographical problems with sea ices of Arctic to establish Northern Sea Route or Ice Silk Road which was just an inaccessible dream for Moscow till few years ago.

Passing through Arctic that is fully covered with at least 150cm diameter pieces of ice might was just like a joke or far dream before end of Cold War and there was no strong logic behind of such assumption.

By start of the Cold War and fast growth of the nuclear technology in 60s to 90s, we can say that development of many nuclear related technologies like construction of reactors, enrichment and producing nuclear armament in one hand andexpansion of maritime industries especially in military section got in force by USSR.

But the main reasons for focus of Moscow on Arctic back to significance of natural resources in this region which composed determinants and important part of USSR’s boundaries.

While latitude of Scandinavian states and Canada is closed to Arctic, but no one of these states has not been successful enough to use the potential opportunities of this region like Russia.

Since Vladimir Putin’s seize of power in 2000 and his plans for reconstruction of Russia’s economy, discover of new routes to access world markets was adopted on the agenda of the Russian government. Finding new costumers for the huge resources of oil and gas was one of the main attitudes of Russia in Moscow’s new economic planning. That’s why Russia began to expand and execution of its significant and mega plans in this regard like establishment of Turkish Stream gas pipeline.

Despite all adopted policy by Russian government, the main problem was Makinder’s concern in his theory of “Heartland” to access the warm water. According to Makinder, the only available link route between Russia and the southern warm water was Iran. That’s why; Russians always have been looking for a way to access free and warm waters by Iran.

But by achieved impressive growth of technology during past decades, it seems Russia has found a safer way to access free waters instead of Iran and that is use of its territorial waters of Arctic that is able to link this country to Europe on one hand and connects Russia to East and China from on the other hand.

As we know, required technology for using the Northern Sea in international transit of freight have always been in hands of Russia and US. But this route has never been as interesting one for US because of its easy access to the free waters on one hand and end of Cold War on the other hand. That’s why there has been not enough interest for US to invest much in expansion of international transit route from Arctic region. US has only one icebreaker in North Sea and Arctic that is built in 1976 and was used for costal patrol in this region during Cold War era.

We try to investigate the probable causes for establishment of the “Ice Silk Road” by Russia in the following:

Expansion of the oil fields of Arctic and oil export increase

Russia got succeedto transport its first oil cargo in 2017 from Hammerfest in Norway into BoryeongPort of South Korea successfully. This shipment was a 200 million dollars LNG cargo which was transported by “Cristophe de Margerie” tanker carrier within just 19 days. It means Russia got succeed to save the time for 30% rather using Suez Canal as the common path of this route.

Russia has invested in development and expansion of the gas field of “YamalPeninsula” more than 27 million dollars and China also has announced its readiness for investment in this mega project. It is worth mentioning that the order of development this project issued by Vladimir Putinpersonally and this demonstrates the level of priority and significance of this project for Moscow. Margarie ice breaker tanker could sliced the huge ices of Arctic with at least 120 cm thickness and passed Arctic within just six days. But it is clear that possibility of such shipment will get very harder during winter season and needs high-developed ice breakers. That’s why, Russia has decided to produce new generation of these ice breakers to remove this obstacle.

Following this policy, Dimitry Rogozin, the deputy of the Russia’s prime minister in his interview with TASS News Agency declared decision of his country to build three new nuclear ice breakers.  He said: “Rosatom [state civilian nuclear power corporation] has now been instructed as part of private and state partnership to think over the algorithm of financing three icebreakers rather than one and then we will make navigable the entire Northern Sea Route. We will be able to lead whatever vessels for any customer by transit through the Northern Sea Route: caravans with goods from Asia to Europe and we will be able to export our hydrocarbons in the form of liquefied natural gas not only to Europe but also to Southeast Asia,” Rogozin said in an interview with Rossiya-24 TV Channel, describing the plans of developing Russia’s icebreaker fleet.

“In 2019, we will commission [the shipyard’s] dry dock. Just imagine the dimensions: 484 meters long and 114 meters wide. Two aircraft carriers can be built there at a time,” the vice-premier said, describing the new shipyard.

Simultaneously, shipbuilders in northwest Russia are building three current-generation icebreakers: the Arktika, the Ural and the Sibir, Rogozin said.

Simultaneously, shipbuilders in northwest Russia are building three current-generation icebreakers: the Arktika, the Ural and the Sibir, Rogozin said.

According to the vice-premier, these icebreakers will be commissioned for operation in 2019-2021 and “will help ensure an all-out escort [of vessels] through the ice from Yamal Peninsula towards the West.”

“Yamal LNG Project” is under construction in Yamal Peninsula and is counted as the most significant maritime project of Russia in energy sector. This mega project includes 200 wells, one airport and 15 tankers (2016) which will be able to export at least 2 million cm liquid gas. According to experts, this amount will be increased to 50 million cm in a year (the Ministry of Roads and Urban development of Iran).

On the other hand, China is one of the most important strategic customers and trade partners of Russia especially in oil section. According to the experts and analysts of energy section, China will be the consumer of 17% of energy resources of the world till 2050. That’s why, if Russia increases the amount of its oil productions, Moscow would become the first oil partner of China instead of the Middle Eastern oil exporters like Saudi Arabia, UAE and Iran.

Transit of freight from China to West (the Ice Silk Road)

According to Dimitry Rogozin, transit of freight from Far East to West using Arctic and Northern Sea will be one the main aims of Russia to establish the North Sea Route. Export of the Russian productions into South East of Asia is one of the other significant aims of creating such route. As Rogozin declared, the new generation of the nuclear ice breakers will be able to carry two aircraft carriers. So the approximate area of the each mentioned freight carrier will be something around 55176 m2 and this dimension will be more than 5.5 hectares!

Furthermore, creation of the new route will be 25-55 percent shorter than the Suez Canal path which links China to Europe to each other.

It is worth to mention that one of the significant exports of Russia from this route will be the mineral extractions like gold, uranium and diamondin worth of more than five billion dollars.

Reduction of China’s dependence on Middle Eastern oil

China is one of the key players and investors in Yamal project and has invested more than 12 million dollars in this mega project. Except this, the Silk Road Fund has fulfilled 20% of the total project cost. But it has to be asked why China follows this project while Beijing fulfills its required oil from Middle East?

In fact, the energy market of Middle East and its stability is under doubt because of existing many problematic factors like anti – Iranian sanction, fire of war all over the region, the issue of illegal immigration of terrorist groups and etc. that’s why such market could not be counted as a stable and permanent energy market for China as the greatest industrial country of world.

So, it seems the Chinese officials have decided to find a more stable alternative to fulfill its energy needs instead of Middle East. On the other hand, we cannot ignore the existing strategic partnership between China and Russia in this way. Also, by creation of Ice Silk Road, it will be more logical for China to fulfill its required energy resources from Russia regarding the issue of short geographical distance between the two countries rather Middle East.

A the end, we have to say that creation of Ice Silk Road is minded as a game changer not only in foreign trade relations of Russia but also will be a revolution in international trade between East and West especially in aspect of trade corridors. It could affect highly on the both classic and new routes in Silk Road like the passing corridors from Iran, Turkey, Azerbaijan and many other states that have enjoyed their geo-economics privileges on this route.

*Mahdi Torabi is head of planning unit at department of the international affairs of the Railway of the Islamic Republic of Iran.

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