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Great game in Central Asia: Rivalry persists

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On October 19, Russia’s President Vladimir Putin visited Uzbekistan. According to media reports, Moscow and Tashkent focused on “prospects for further strategic partnership,” cooperation in military technology, and economic ties between the two countries. Moscow is investing billions of dollars and is planning to open more branches of top Russian universities in Uzbekistan. On the same days, October 17-19, Tashkent played host to the VIII Central Asian Trade Forum, organized by the United States Agency for International Development (USAID). As they spoke at the event, the US representatives announced Washington’s interest in providing duty-free access to its domestic market for several thousand products from Central Asian states. This approach reflects the policy of bilateral cooperation which the two parties agreed upon during a visit of the President of Uzbekistan Shavkat Mirziyoyev to the United States in May this year, which resulted in $ 4.8 billion contracts.

Central Asia has been a zone of geopolitical rivalry between the world’s top players for centuries. Even when the main part of this territory was part of the USSR, the USA, China and other countries tried to influence the Soviet “soft underbelly”. After 1991, the region quickly moved to the sidelines of the military-strategic interests of Moscow, Beijing and Washington . At present, the three powers are concerned about the threat of Islamic extremism and an increase in drug trafficking in the region. While sharing the same concerns, the parties interpret the causes of these threats in different ways. In general, regional competition of external powers is moderate, being visible mainly in the economic sphere. For now, two integration projects are developing at fast pace in Central Asia – the Eurasian Economic Union (EEU), promoted by the Russian Federation, whose members are Kazakhstan and Kyrgyzstan, and the Chinese Silk Road Economic Belt (SREB), targeted at all Central Asian countries. In the mid-2010s, the United States unveiled its conceptual vision of the future of the region — the New Silk Road Initiative, which, however, has not yet seen any substantial progress.

At present, countries of the region are pursuing the policy of building secular national states. Searches for national identity in the values of Islam or Pan-Turkism is a thing of the past. Meanwhile, for a part of the population, religious principles still prevail over the national and civil ones. Also, there are a number of other challenges to the stability and security of the region. Russian International Affairs Council experts say that political institutions are weak, the economy is poorly diversified, heavily corrupt, hinging largely on “shadow” schemes and smuggling. Social and economic problems, disputes over the distribution of water resources, and inter-religious and inter-ethnic conflicts are acute. On top of all this comes the rapidly aggravating problem of uneven economic development of  countries. The main external threats are proximity to Afghanistan and the Middle East with a high degree of border penetrability.

In general, the ruling circles of the states of the region are trying to maintain power and property and evade serious socio-economic upheavals. The financial and economic interests of the elite are largely oriented at the West. However, the current challenges to domestic and regional stability, as well as the nature of the existing regimes, are what scares Western investors the most. As a result, countries of Central Asia are drifting between globalization and regionalization, between economic projects that benefit primarily the elites themselves, and the need to guarantee an increase in the living standards of wide sections of society,  “between efforts to preserve a niche in the “old” world economy and secure niches in the “new” one”.

Over the past few years, Russia has been promoting its interests in the region within the framework of the CSTO, the EAEU and the Customs Union. Until recently, the majority of projects with the participation of Russian investors were concentrated in the oil and gas sector. Meanwhile, representatives of local elites and business communities would prefer to see Russian investments in the energy sector, in the creation of cross-border “transit transport routes.” There is a high demand for projects that would develop interstate economic cooperation within the framework of the EEU, and projects whose products would be oriented at markets beyond the post-Soviet space. These areas include the military industry, the mining sector, and the supply of agricultural products. At the same time,  experts point out “excessive” “coordination and regulation of economic relations” within Russian regional initiatives.

Nevertheless, Russia maintains a significant potential to secure its economic influence in the region. Most enterprises and agricultural facilities in Central Asia date back to the Soviet days and most of the infrastructure, railways and highways are focused on Russia. The Russian media are popular in the region, supporting the idea of stability and sovereignty. Until early 2010s, the “Soviet legacy” enabled the Russian Federation to remain a major economic partner for all the Central Asian countries. However, in recent years, Moscow has been losing its leading economic position to China, mainly, for lack of investment.

China’s rapidly growing economy requires more and more resources. Given that Central Asia is rich in oil, gas, minerals and cotton, Beijing has been trying to promote economic projects in the region since the early 2000s. At the end of 2017, trade turnover between China and countries of Central Asia reached $ 30 billion, whereas trade between Russia and the region was less than two thirds of this figure. China overtook Russia in trade with all countries in the region, except Kazakhstan. Now, China is pursuing multibillion-dollar projects in transport and pipeline infrastructure as part of the strategy of the Silk Road Economic Belt (SREB), and is increasing investment in industrial facilities and joint ventures. There are plans to build three railway corridors: between the Chinese port of Lianyungang and Kazakh Almaty, and two between the south of China and Central Asia. By the end of 2017, the Chinese investments in Central Asia had exceeded $ 100 billion. Investment plans until 2030 are estimated at several hundred billion dollars.

Meanwhile, according to most Western analysts, Russia and China have been pursuing a coordinated and well-balanced policy of extensive cooperation in Central Asia. China has been focusing on economic projects in the region, while Russia, besides the economic sphere, has taken the lead in ensuring military and anti-terrorism security and regional stability. According to Western estimates, Central Asia has been picked by Moscow and Beijing as number one site to practice strategic interaction, which can then be used in other parts of Eurasia. This cooperation hinges on an agreement reached by the Russian Federation and the People’s Republic of China at top level in 2015 on integration between the EAEU and the SREB. The economic role of the Shanghai Cooperation Organization is also expected to increase after Kyrgyzstan assumes the SCO presidency in 2019. Both countries are fully aware of the strategic mutual benefit from participation in these projects and neither pursues economic or regional security initiatives that could be detrimental to the other party.

In 2011, Washington launched the New Silk Road Strategy (NSR), which initially focused on the economic revival of Afghanistan through its integration into regional development projects. In autumn 2015, as the US Secretary of State, visited all five Central Asian countries in the course of his first tour, the Samarkand Declaration was adopted to promote the New Silk Road, which declared the widest possible range of areas of cooperation between the United States and countries of the region. Gradually, the United States began to shift from the still idealism-ridden policy of supporting the “development of democracy” in Central Asia towards a more pragmatic course, aimed at reducing the influence of the Russian Federation while simultaneously moderating the presence of China.

So far, the extent of the Trump administration’s interest in Central Asia is uncertain. It looks like the United States is ready to encourage local authorities to “soften” domestic policies, including on the expansion of international contacts, by boosting economic assistance and cementing ties between representatives of the business community. In particular, moves of this kind have been reported to come from the USA in the direction of Uzbekistan and Kazakhstan. USAID enjoys a significant influence on public associations in Kyrgyzstan, Kazakhstan and Uzbekistan. As for region-wide economic projects under the patronage of the United States, most of them are stalling, because they are made dependent, to this or that extent, on stabilization in Afghanistan.

Another important tool for strengthening the US positions in the region after 2001 is the promotion of a counter-terrorism agenda, a military presence, primarily in Afghanistan, and the development of military and defense ties with the Central Asian states. Preventing the spread of radical movements in Central Asia meets the interests of both Washington and all countries of the region.

In the meantime, the interests of Central Asian countries spread beyond the bounds of financial assistance and economic cooperation as they are unequivocally making it to understand that they are looking for new partners and security guarantors capable of balancing the United States, Russia and China.

This encourages countries of Central Asia to develop contacts with a whole range of external players that have noticeable interests in the region. The influence of the European Union in Central Asia decreased, after the promising projects of the previous decades fell through. EU experts argue that the Union lacks the resources to compete with Russia and China. Therefore, they call for “focusing on specific projects” that would contribute to raising the living standards across a wide section of society. As for China’s SREB initiative, the EU sees it as a significant destabilizer, given the insufficient involvement of local, particularly human, resources, and a dramatic increase in Central Asia’s political and debt dependence on Beijing. Therefore, the EU is seeking to “fit” “into the current situation with a view to influence further developments from within.”

Since 2012, Japan has been stepping up its political efforts in Central Asia. As he visited the region in 2015, Prime Minister Abe signed $ 27 billion agreements, including on cooperation in the fuel and energy sector, in infrastructure projects, and in measures to combat terrorism and extremism. While doing this, Japan reiterates its readiness to maintain extensive ties with other powers, including Russia, China and Turkey. The latter persists in its claims to play a leading role in Central Asia, nurturing ambitions to become the leader of the Turkic world. However, Ankara’s positions have suffered a blow in recent years. President Erdogan has faced a lot of criticism for not providing enough support for the Turkic communities in Russia and in the west of China.

Thus, the leading circles of the Central Asian countries are pursuing a “purely pragmatic” policy. Among the priorities are structural economic reforms, attracting more investments, primarily to the production sector and high-tech industries, and the development of “human capital.”  As global players demonstrate renewed interest in the region, Central Asia has an option to pursue an increasingly varying and multi-vector policy. In spring this year, Uzbekistan and Kazakhstan made a bid to form a community of five Central Asian states without participation of external powers. At last, the transformation of Central Asia is taking place against the background of the arrival of a relatively new generation of leaders, fewer and fewer of whom see Moscow as a major historical partner. Given these conditions, Russia, if it wants to maintain its positions in Central Asia, ought to devise new approaches to regional policy. In our opinion, a strategy that should take center stage in Central Asia in the near future is one that would provide countries of the region with an economic cooperation agenda that does not require a clear geopolitical choice.

First published in our partner International Affairs

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Central Asia

The Track to Prosperity

Sabah Aslam

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The world is rebalancing and one of the key gears of this shift is that the tide has turned towards eastern hemisphere. The world is being reshaped here, not just politically but also economically. The long awaited curse has now been lifted as the cogs of new era are positioned in destiny of eastern hemisphere. As liberalism re-emerges over international arena, the thrust of this new order is in trade and connectivity.

One such cord to this anecdote is Uzbekistan and its rising role in the infrastructural developments and regional activity. This Central Asian region and Afghanistan had been conflict zones for long periods of time but now Asian picture is changing. With changing regime in Pakistan, US-Taliban Dialogues going on in Afghanistan the dynamics of regional politics are changing. Tashkent already has cordial relations with Kabul and thus leads many developmental projects in the Afghani land including the Hairatan to Mazar-e-Sharif Railway Project. Being the only country without any rift with Kabul administration, Uzbekistan is seeking to put its influence not by force but by the fist of development. Mutual benefits of both countries can open new doors to regional connectivity and prosperity. Not only this, Uzbekistan is determined for regional connectivity with various projects including Central Asian countries, china and South Asia. Uzbekistan also shares good relations with Pakistan, which is its second largest trade partner in the region after Russia. Also Uzbekistan also shares the floor of Shanghai Cooperation Organization with Pakistan. But after the changed ruling party and its policies, Uzbekistan came up with better ideas.

One such venture was recently proposed by the delegation led by Uzbekistan’s foreign minister, Mr Abdulaziz Kamilov, who visited Pakistan and met his Pakistani counterpart, Mr Shah Mehmood Qureshi at the end of the last year. The proposal which may evolve into Euroasian concept of interconnectivity, aimed at connecting Pakistan with Uzbekistan through a railroad network which will pass via Afghanistan’s Mizari-Sharif. The two possibilities for the construction of lines are Mazar-i-Sharif-Khulm-Puli-Khumri-Doshi-Surabai-Jalalabad-Torkham on Pakistani side or along Surkhan – Puli-Khumri – Doshi – Surabai-Jalalabad-Peshawar (Pakistan).

The proposal if implemented will have far-reaching outcomes, booming the trade which is the dire need of economy for these countries. The trans-afghan railway project will not only connect Pakistan to central Asia and its market but also open doors to Russia, which can also play key role in the economics of the nation. The five year plan which was presented in December of 2017 by Uzbekistan involved such developments which will help the country to boost up its economy by establishing transit trade routes benefitting the economy and amplifying the regional connectivity. The trade route between Uzbekistan and Pakistan will allow access of central Asian states to open waters enabling their reach to the rest of the world through the deep sea port of Pakistan.

The Uzbek soil is enriched with the production of cotton and sugar and apart from this the agro-machinery in Uzbekistan is more advanced than in Pakistan since Islamabad and Tashkent already are trade partners which can clearly be seen as in 2018 the trade between two, crossed the 90 million US dollars mark. This trade volume can reach new altitudes if the direct link is established between the two countries and Pakistan, a country with agro centered economy, can have advanced parameters.

Such collaborations not only can decrease the trade deficit but also boon the local industry and economic growth can be achieved in areas which are underdeveloped. Also the majority of the population in this part of the world lives below the poverty line, the track can help in improving their living standards. Various studies indicate that high cost of trade in this region is because of lack of interregional infrastructure. Therefore leading to lower prices of trade can help raising lower class and expanding middle class. Also when there is a market, Foreign Direct Investment comes in rushing. Hence overall the conditions of the states would improve drastically over the years.

Uzbekistan has been long interested in Afghan soil which is conflict ridden from its postmodern to modern history. It is difficult for the landlocked Uzbekistan to have a global access. Thus in order to open its trade tentacles Uzbekistan needs Afghanistan and to outreach globally it needs a port which is deep sea. The proposal if comes into reality will make good use of Pakistan’s strategic location, making Pakistan as the focal point for regional trade and its connectivity with the rest of the world. Uzbekistan and Afghanistan are landlocked states and need a country like Pakistan with warm water sea ports for getting to hot waters.

A railway line will reduce the cost of transportation and make it convenient for the two states for getting a suitable sea port. Also, a train would take not only goods but also people. This would lead to increased people to people contact. With people connected together, peace and stability in the region would be comparatively easy to attain. Developing the underdeveloped areas of Pakistan and Afghanistan and the sense of insecurity which is visible will be minimized. These developmental projects can enhance the capacity to achieve collective prosperity and enrich the relation between the countries. Consequently, a better image of these countries will eventually be projected. Through such initiatives the whole eastern region will be interconnected with each other and trade will be boomed benefitting participant countries.

Apart from this, the world has now left with only a few untapped resources which are mainly located in central Asia and Afghanistan. If odds don’t go against, it will be a great victory for Pakistan to be connected with Central Asian states directly through the rail road network. With the new shift and East into light, everyone is eyeing on Asia and its proximities for energy reserves. Pakistan, once connected through railroad, can take maximum possible advantage of this untapped potential in the region which would not only be beneficial for countries itself but for Pakistan as well.

Recent proposal can curb the miseries of Afghanistan and steer it into a healthy voyage of productivity, and through developments peace and security can be achieved in the Afghanistan. Such initiatives will open doors not only for Pakistan, Afghanistan and Uzbekistan but also for the countries that have potential markets. Apart from this, these acts will make region interdependent which further can deescalate the tensions among countries opening them for each other and becoming market for each other. The regional connectivity will also boost the integration and regional harmony.

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Central Asia

Belt and Road Initiative in Central Asia and the Caucasus

MD Staff

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Left to right: Speakers Johannes Linn of the Brookings Institution, Harinder Kohli of the Emerging Markets Forum, ECA Chief Economist Asli Demirguc-Kunt, and Caroline Freund, World Bank Director of Trade, Regional Integration and Investment Climate. The panelists discussed the Belt and Road Initiative in Central Asia and the Caucasus. Photo: World Bank.

The massive Belt and Road Initiative (BRI) plans to build roads, railways, seaports and other trade infrastructure in dozens of countries in the Eurasian continent. The BRI aims to connect Asia to Europe, and the initiative has steadily expanded economic corridors and projects as far as Africa.

Two of the planned corridors of this ambitious project will run through countries in the Central Asia and South Caucasus. These countries are mostly land-locked, and their transportation infrastructures and quality tend to be low.

“If properly implemented, BRI transport projects are expected to reduce travel times and trade costs, potentially leading to enhanced trade, foreign investment which would translate into higher economic growth and poverty reduction for the countries involved,” said Asli Demirguc-Kunt, chief economist of the World Bank’s Europe and Central Asia (ECA) region.

“However, there are also significant risks involved, and the initiative can leave countries with excessive debt and poor quality projects; and there are potential environmental and social costs,” Demirguc-Kunt said. “So the question is how can these countries maximize the benefits and minimize the risks?”

Economists Harinder Kohli of the Emerging Markets Forum and Johannes Linn of the Brookings Institution spoke about the BRI at the inaugural ECA Talks event, a series of monthly talks in which researchers exchange and challenge ideas about key issues affecting the region.  Their talk was based on a study that draws on background notes prepared by experts from the region on their countries’ perspectives on the BRI, hence providing an “inside-out” perspective. 

One of the constraints to good analytical work in this area is that no comprehensive dataset exists with reliable information about BRI project costs, conditions and terms of financing.

“There are great benefits to be had but also considerable risks that need to be addressed in one way or another,” said Linn. BRI investments should reflect country priorities and be integrated with national and regional plans.  Macroeconomic constraints, especially debt sustainability, must be carefully monitored and respected. 

Governance and corruption issues are important as in any large infrastructure project, so there is a need for greater transparency on terms and conditions of these projects, for example open and transparent public procurement.  Some BRI routes pass through ecologically important landscapes lacking adequate protections, posing a wide range of environmental and social risks, which need to be addressed.

Reaping the benefits will also depend on soft investments made to support trade. Such soft investments include ensuring the efficient operation and maintenance of projects after they are built and improving trade logistics at border crossings. Kazakhstan, for example, stands to receive a potential $5 billion annually in transit fees from goods moving through it to other markets.

BRI projects also include investments in energy, mining, agriculture, communications, and technology to improve trade connectivity. But not everyone will benefit from BRI projects, which will usher in more global trading competition and labor mobility. Countries will need to consider ways to compensate businesses and workers that are eventually forced out.

“What we need is to have more data and more information,” said Caroline Freund, World Bank director of trade, regional integration and investment climate. “This is the only way we are going to understand where the benefits come from.”

World Bank

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Kazakh police raid raises spectre of China’s long arm

Dr. James M. Dorsey

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A police raid on a Kazakh group documenting the plight of Kazakhs and Uyghurs caught in a brutal crackdown in China’s north-western province of Xinjiang is about more than a government seeking to please Beijing in the hope that it improves the lot of its ethnic kin while preserving diplomatic and economic relations.

Amid suspicions that the raid on the offices of Atajurt Eriktileri and the arrest of activist Serikjan Bilash was carried out as a result of Chinese pressure aimed at squashing criticism of the crackdown, the raid seemingly reflects an increasingly aggressive Chinese effort to impose its will on others and ensure that they observe the respect and deference that China believes it deserves.

Atajurt Eriktileri supports relatives of people who have disappeared in Xinjiang and says it has documented more than 10,000 cases of ethnic Kazakhs interned in China.

Police on Sunday sealed the group’s office in Almaty, Kazakhstan’s largest city, seized the group’s computers and archives and flew Mr. Bilash, who said he was being accused of “inciting ethnic hatred, to the Kazakh capital of Astana.

The East Turkistan Awakening Movement, a Washington-based Uyghur exile group, said Mr. Bilash had been arrested on charges of “creating tensions between #Kazakhstan and #China.”

The Kazakh police raid is but the latest incident pointing to China’s more aggressive form of diplomacy that includes an increasing number of undiplomatic comments by Chinese diplomats across the globe.

At times, those comments are couched in civilizational terms steeped in what political scientist Zhang Weiwei describes as the rise of the civilizational state under President Xi Jinping.

Describing the trend towards a civilizational state that involves a rejection of Western concepts, including notions of human rights and freedom of religion, Financial Times columnist Gideon Rahman noted that China was not alone in its embrace of the idea as an alternative to the traditional concept of a nation state based on national borders and language. Mr. Rahman suggested that the concept was also gaining currency in countries like India and Russia.

Chinese Foreign Minister Wang Yi defended his diplomat’s more outspoken statements by pointing to China’s need to stand up for its “rightful and lawful interests.” Mr. Wang insisted that China would not tolerate infringements of its sovereignty and national dignity.

“Chinese diplomats, wherever we are in the world, will firmly state our position,” Mr. Wang told journalists this weekend covering the National People’s Congress.

Former senior Singapore diplomat Bilahari Kausikan noted that “China does not just want its new status recognised as a geopolitical fact; China wants its new status accepted as a new norm of East Asian international relations; a hierarchy with China at the apex. Most countries accept the geopolitical fact; few accept the norm.”

Examples of China’s more aggressive attitude abound while the Kazakh raid suggests that China’s concepts of deference and respect amount to far more than traditional notions of respect. They also provide a potential insight into the values and norms that in China’s view would undergird a new world order.

China’s notion of deference was put on display last September at the Pacific Islands Forum when Beijing’s ambassador to Fiji, Du Qiwen, allegedly demanded the right to speak before Tuvalu prime minister Enele Sosene Sopoaga. The forum’s host, Nauru president Baron Waqa accused the Chinese envoy of being “insolent” and a “bully.”

Both Nauru and Tuvalu, to China’s chagrin, maintain diplomatic relations with Taiwan.

Similarly, Papua New Guinea police were called after Chinese officials allegedly tried to force their way into the office of the country’s foreign minister in a bid to influence the final communique of last November’s Asia Pacific summit.

The summit ended without a final statement because of disagreements between the United States and China. Chinese officials dismissed the report of them having attempted to gain access to the foreign minister’s office as “a rumour spread by some people with a hidden agenda.”

In an oped in The Hill Times, an Ottawa-based newspaper, Lu Shaye, China’s ambassador to Canada, described as “Western egotism and white supremacy” demands that China release two Canadian nationals arrested in China.

The two Canadians are being held in apparent retaliation for the detention in Canada at the behest of the United Sates of senior Huawei executive Meng Wanzhou on charges of having misled banks about the company’s business dealings with Iran.

A series of incidents in the wake of a visit to Sweden last September by the Dalai Lama involving Chinese tourists and a satirical Swedish television show that poked fun at Chinese visitors and excluded Taiwan and parts of Tibet from a map of China drew the ire of the Chinese embassy in Stockholm.

The embassy denounced Swedish police as “inhumane,” decried “so-called freedom of expression,” charged that the tv show “advocate(s) racism and xenophobia outright, and openly provoke(s) and instigate(s) racial hatred and confrontation,” and issued a safety alert to Chinese tourists because of multiple cases of theft and robbery and poor treatment by Swedish police.

In line with Mr. Wang’s justification of his diplomats’ more undiplomatic approach, Brookings fellow Ryan Hass told Bloomberg that the envoys were “matching the mood of the moment in Beijing… Some in Beijing also seem to be growing frustrated that China’s rising national power is not yet translating into the types of deference from others that it seeks.”

The raid in Kazakhstan, like earlier cases such as Egypt’s return at China’s request in 2017 of up to 200 Uyghur students to an uncertain future in the People’s Republic, suggests that Beijing maintains an intrusive, far-reaching definition of its concept of deference and respect.

Kazakh activists charged that the raid was indicative of the kind of pressure applied by China. “Our government doesn’t want to spoil relations between Kazakhstan and China,” said Atajurt’s lawyer, Aiman Umarova.

There was no independent confirmation of assertions that Chinese pressure prompted the raid.

In a video statement, Mr. Bilash confirmed that he was Kazakh police custody and had not been detained “by either the Chinese or Chinese spies”.

Mr. Bilash’s wife, Leila Adilzhan, said she was “afraid our government will give him to China.”

That may be one step too far for the Kazakh government given mounting anti-Chinese summit among Kazakhs and public demands that Kazakhstan be more forceful in its standing up to China for the rights of Kazakh nationals and Chinese citizens of Kazakh descent. Kazakhs constitute the second largest minority in Xinjiang after Uyghurs.

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