In 2013, China announced the creation of the Silk Road Economic Belt and the Maritime Silk Road of the 21st century – this initiative of “The Belt and Road” was designed to turn Asia and Europe into a single economic region. It focuses on the industries that are important for the internal growth in China and, at the same time, involves over 70 countries with a total population of 4.4 billion. Today, the initiative has already changed the economy of Eurasian countries significantly. Over the last seven years, the region got approximately $98 billion in investments in order to implement 168 projects.
What’s in it for China?
In recent years, China’s economic growth has slowed from double-digits to 6.4% in 2017. The wide-reaching economic model formerly in use (based on cheap labour, gross investment, and exports) has faced a number of serious challenges.
The country has to overcome industrial overproduction – steel making in China is a great example of this challenge. According to official data, China’s production capacity amounts to 1.1 billion tons per year, while internal demand is approximately 700 million tons, and China’s export partners cannot consume the remaining 400 million tons. The country needs to be provided with an access to new markets and to launch new resource-intensive projects.
In addition, Chinese authorities have been facing the problem of a sharp increase in labour cost. We live in a world where the average labour cost in China ($758) is higher than in Russia ($615). And it causes many multinational corporations to move their manufacturing facilities to other South-East Asian countries, such as Vietnam. China is losing its historical competitive edge – cheap labour, and analysts are increasingly talking about the risk of “stalling” in the trap of average income.
Furthermore, China needs to reduce its debt burden. The country is one of the world leaders in joint debt rating. In 2016, the total debt load in China amounted to $27 trillion, which equals 254% of the country’s GDP. Simultaneously, the amount of “bad” debt in the banking system is growing.
Social inequality and poor ecology exacerbate the situation further. For example, 1% of the wealthiest Chinese control roughly 33% of total national wealth, while 25% of the poorest Chinese possess just a mere 1%. Beijing sees as little as 124 clean days every year, while total environmental destruction amounts to 3.5-5% of China’s total GDP. In addition to a number of internal reforms adopted to create an economic model focused on domestic consumption, the Chairman of the People’s Republic of China, Xi Jinping, proposed the “Belt and Road” initiative. Among other things, it is designed to stimulate domestic economic growth through external forces – ensuring access to Chinese products in new sales markets, natural resources, integration into complex production chains, exchange of advanced technologies, and the establishment of new high-tech manufacturing facilities in China. To do this, Chinese authorities are attempting to create a large-scale platform that will enable the expansion of trade and investment relationships, as well as technological cooperation between China and Central Asia, Europe, and Africa. This is believed to be a way for China to gain an access to the tools needed to overcome the economic development challenges described above.
China helped create powerful financial institutions in order to finance projects within the framework of the Belt and Road initiative, such as the Asian Infrastructure Investment Bank with $100 billion in capital, and the Silk Road Foundation ($40 billion in capital). The New Development Bank (or BRICS Bank) is also seen as an important element of the Belt and Road projects’ financial infrastructure, which will also involve the participation of the largest Chinese state-owned banks and development institutions. The total budget for projects under the Belt and Road initiative is estimated at an astronomical $1.3 trillion. The bulk of these investments is expected to be sent to the countries of the Eurasian Economic Union, including Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan, which are key to the implementation of The Belt and Road initiative.
How will this Chinese initiative affect other countries?
The Belt and Road initiative will stimulate major infrastructure changes not only in China, but also in other countries through which the New Silk Road passes. There are expectations for the construction of new roads and railways, power plants, ports and fuel pipelines. The Chinese investments are expected to accelerate the growth of the economies of the countries participating in the Belt and Road initiative.This is precisely what is meant by mutually beneficial cooperation, or the “win-win” model, which Chinese officials often reference. Many believe in the efficacy of such a model. A total of 69 countries and international organizations have entered into agreements with China to cooperatively implement the framework of The Belt and Road initiative. In practice, cooperation is developing in several key areas.
In the long run, the Chinese government is striving to create a single integrated economic space, with the ultimate goal of establishing a free trade zone. Already, by the end of 2017, China’s trade turnover with the countries that signed cooperation agreements within the framework of the Belt and Road initiative exceeded $800 billion. To further integrate the economies of Asia and Europe, the creation of six economic corridors has been proposed. The main routes of the Silk Road Economic Belt will connect China with Mongolia and Russia, Indo-China, Pakistan, the Republic of Bangladesh, India and Myanmar, as well as Central and Western Asian countries. Today, goods from China are most commonly delivered by sea, taking approximately 45 days. The construction of modern highways and high-speed railways will shorten this delivery period to 10-15 days.
The most important project in this respect is the largest Central Asian land port – Khorgos. This facility is strategically located in Kazakhstan in the Free Economic Zone called “Khorgos – Eastern Gate”, which also includes logistics and industrial zones. China has invested over $3 million in this project, which saw the first trains come to port in 2015. It is expected that the majority of cargo trains traveling between China and Europe will pass through it in the future.
The formation of a modern transport and logistics infrastructure in the countries of Central Asia, the Caucasus and, even, Europe is a key component for the development of these national economies. Such projects enable China to unload their excess production capacity and deliver domestic goods to foreign markets. Not only large state-owned companies, but small and medium-sized businesses stand to gain as they provide services for complex projects implemented under the framework of the Belt and Road initiative. For example, since 2011 Chinese and European cargo trains have traveled through 28 cities in 11 European countries. Currently, there are more than 4,000 trips per year, and this number is expected to increase to 5,000 by 2020.
The Belt and Road initiative also takes into account the need to create new energy capacities – construction of interstate power lines, pipelines and gas pipeline systems, and the development of new energy-deposit fields.
One of the most promising projects in this area is Yamal LNG, the Russian liquified natural gas plant that was commissioned at the end of last year. The project’s budget is estimated at $27 billion with approximately $20 billion provided by Chinese banks, led by the Silk Road Foundation as the primary investor.
Additionally, the Power of Siberia gas pipeline is expected to be complete by the end of 2019 – it will enable Russia to supply China with 38 billion cubic meters of gas per year for 30 years. The pipeline, traversing the Republic of Sakha (Yakutia), Irkutsk and Amur regions, will become the largest gas transportation system in Eastern Russia, thanks to over $70 billion in investment by Russia and China.
According to online companies Ctrip and Alibaba, Chinese citizens took 129 million tourism trips abroad last year, spending a total of $118.4 billion. Implementation of the “One Belt, One Road” strategy will contribute to the influx of Chinese tourists to countries in the Eurasian Economic Union. Indicators of that influx are already growing. For example, last year a record number of Chinese tourists visited Russia – 1.5 million. However, it is important to note that the bulk of revenue generated as a result of serving Chinese tourists goes to Chinese businesses, not Russian ones, as Chinese travelers tend to buy tour packages and order guide services from home, paying either in cash or through national Chinese payment systems.
The Silk Road Economic Belt also fosters business cooperation between China and other Eurasian countries in the field of education. Today, 25% of all international students in Russia come from China. This indicates an especially high rate of international education collaboration with China as Russia’s share is a mere 2% of all Chinese students studying abroad (most still prefer European and American universities). China and the EEU countries are trying to solve the problem of a personnel shortage in the fields of economics, law and business, increasingly developing joint educational programs. For example, the Moscow School of Management SKOLKOVO runs specialized “Understanding Russia” programmes for Chinese entrepreneurs on how to effectively conduct business in Russia. Over 300 business leaders from China have been trained in this programme. In addition, in November, 2018 the Moscow School of Management SKOLKOVO and the business school of the Hong Kong University of Science and Technology will launch “EMBA for Eurasia”, a cooperative programme designed for business leaders in Eurasia.
The most widely-accepted theories of economic growth see technological development as the main driver of modern economic growth. Within the Belt and Road initiative, a special role is played by the sharing of technologies and technological innovations. As of today, 75 industrial parks are under construction as a part of the initiative.
In 2015, a Chinese holding bought 65% of YotaPhone, the Russian smartphone manufacturer. China also actively collaborates with other Eurasian countries on innovative projects in the fields of biotechnology, photonics, biomedicine, LED, food and consumer goods. In essence, it means that “One Belt, One Road” propels the industries of the Eurasian region to a new technological level. For example, several organizations from Belarus, Kazakhstan and Russia are developing an innovative project to cool heavy-duty machinery – the so-called “double phase-shift cooling system” is being developed on a super-computer technology platform.
Work is being done in other areas as well, as seven belts are planned to be put in place, including financial and agricultural ones. In total, roughly one thousand different projects are expected to be implemented across different countries in the long term.
What are the barriers for implementing the strategy?
The Belt and Road is an initiative, not a project, meaning it has no defined goals or deadlines. China first mentioned its intention to establish the Silk Road Economic Belt and the Maritime Silk Road of the 21st century back in 2013, yet today, five years later, there is still no official information about the total number of projects or participating countries that should be involved, rendering the strategy somewhat amorphous. Unless the Belt and Road initiative is “institutionalized,” business can not use standard project and investment approaches, which makes it difficult to implement the overarching plan.
Furthermore, China is reducing investment in the Eurasian region. In 2013, the country allocated as much as $18 billion toward the project, but cut this amount down to $10 billion in 2016. If China had not invested in Iran’s nuclear program that year, this amount would have dropped to $5 billion. Such an approach makes predicting future investments challenging. The internal economic and political dynamics of China contribute to the challenge of forecasting the trajectory of the initiative – public and private investment banking institutions have begun to scrutinize these investment projects, as too much money was spent inefficiently or lost, drawing the attention of Chinese regulatory bodies.
Another important roadblock is the fact that some of the announced projects have not been a success. For example, the construction of a high-speed railway between Moscow and Kazan, which was originally designated as one of the priority projects for the Belt and Road, stalled. The construction of this Russian segment was supposed to be the first stage in building a railway between Moscow and Beijing, which was to be followed by an even more ambitious “Eurasia” railway project, connecting Beijing, Moscow and Berlin. Unfortunately, under current financial conditions, these projects are not economically viable, which halted their development at the feasibility study stage. This is a clear example of collaboration in which strategic ambitions outpace, or fail to take into account, the economic and investment feasibility of the Belt and Road projects.
Nevertheless, the initiative has emerged at the right time. At a time when protectionism is gaining momentum in international trade, China is driving an expansion of free market values, simplified customs and visa procedures, and the creation of transportation and logistics infrastructure that will ensure the quick and easy delivery of goods to new markets. This approach enables multilateral development at the domestic level and eliminates barriers to business that already seem archaic in the global world of the 21st century.
U.S.- China Strategic Competition in The East Asia
East Asia has been the most dynamic region where development has been internationally recognized. The regional politics of the region has developed a paradox that has flamed up the economic environment of the region. The trends have shown the increased intensifying security issues along with the strategic completion that has spread the security and economic tensions across the East Asian Region. In a global circle, China is known as the revisionist state. The historical manners suggest the reclaim of East Asia by the Chinese. This claim has intensified the relations between the US and China in East Asian Region. The main challenge for China is to shift the US intervention from the East Asian region for the balanced equation at the strategic level. This might provoke the US and its allies in East Asia such as Japan that will help the US to jeopardize the Chinese rule from the region. The challenge for the US and its allies in the East Asian Region is more complicated because of the economic stability of China at the International Level. This might be a proxy war for both the superpowers in the East Asian region where the conflict may rise compromising the strategic stability of the region. The strategic location of the US lies in the actual form of ability and project power over great sustainable intervals. The strategic behavior increases the policies and shapes the allies.
One prevalent belief in the United States about China’s long-term policy goals in Asia is that Beijing aspires to be the regional hegemon and wants to restore a Sino-centric order in the region.
First, Beijing favors unipolar ties at both the global and regional levels and believes that with ongoing economic growth, this trend will continue intra-regional political consultation in Asia, influence on regional affairs is going to be more diversified and more evenly distributed. Secondly, although China expects some relative increase in its influence in Asia, it understands that thanks to the boundaries of its hard power and particularly its soft power, China can never achieve a grip cherish its role within the ancient past or to the U.S. role within the region at the present.
From Beijing’s perspective, the US is an East Asia power, although not an Asian power, and its political, economic, and security interests within the region are deep-rooted, as are its commitments to regional stability and prosperity. Beijing has always welcomed a constructive U.S. role in regional affairs. At the identical time, however, Beijing also feels uneasy with certain aspects of U.S. policy. As a superpower, The US has been too dominant and intrusive in managing regional affairs. It fails to pay due regard to the voices of other regional players and sometimes gets too involved within the internal affairs of other states, lacking an understanding of their culture, history, and values.
The US and European aspects towards the South China Sea and East Asia should involve long-term perspectives of engaging ASEAN states. Such impacts will create room for the US to tackle China in the East Asian region. The development of any comprehensive strategic security policy is the need of the hour that assures one’s interest in the region. Both the states perceive a threat from each other and try to further advance their capabilities for the sake of safety and security. The US is not in a position to deal with the other power far away from its homeland, sustaining its military and protecting allies. Aggressive behavior in strategic competition can lead to unwanted results. The US would have to accept the strategic realities of China to normalize the relations. China on the other hand should rethink its policies in East Asia and Indo Pacific. However, as yet, deterrence has played its part by keeping states from a large-scale action. States running in the race of acquiring arms conventionally due to uprising strategic competitions are worsening any likely condition of conflict.
Key points for US:
In terms of identifying specific actions for a U.S. strategy for competing strategically with China in East Asia, a key element would be to possess a transparent understanding of which actions are intended to support which U.S. goals, and to take care of an alignment of actions with policy goals. Cost-imposing actions are actions intended to impose political/reputational, institutional, economic, or other costs on China for conducting certain activities within the East Asian Region, with the aim of persuading China to prevent or reverse those activities. Such cost-imposing actions need not be limited to the East Asian Region only.
The development of any comprehensive strategic security policy is the need of the hour that should involve joint military maritime exercises. The US and China have set their limits in coordinating military to military joint cooperation due to their desired interests and competition. Both the states perceive a threat from each other and try to further advance their capabilities for the sake of safety and security.
Summit for Democracy Attempts to Turn Multicolor Modern World into Black and White Divisions
One of the most important takeaways from the recent sixth plenary session of 19th CPC Central Committee is that Beijing flatly rejects Westernization as the path to modernize the Chinese society and the national economy. Instead, as it was underscored in the plenary Communiqué, the country will continue to stick to “socialism with Chinese characteristics in the new era.” The leadership will preserve and further develop the system that served the people so well over last more than 70 years.
This statement did not come as a surprise to numerous China watchers all over the world. In fact, the critical choice between socialism and Western-type liberalism was not made in November of 2021, but decades ago.
One can argue that the outcomes of the sixth plenary session are yet another manifestation of a more general global trend: The world has been and will continue to be very diverse in terms of political systems, social models and economic patterns of individual nation states. Moreover, the odds are that this diversity will increase further literally in front of our eyes. Instead of the “end of history,” we will observe more intense multifaceted competition between different types of social development.
One way to react to this emerging reality is to accept it as a positive trend that enhances the overall stability of the global social system. The more diverse and complex the system is, the more resistant it is to various shocks and disturbances. To make a rough analogy with biology, a natural forest, which is a very diverse and complex ecosystem, is much more resistant to whims of the weather and natural disasters than a man-cultivated monocultural field. Accepting the trend, we should focus on how to manage competition within the increasingly diverse and complex world so that this competition will ultimately benefit all of us.
The other way to deal with this reality would be to start fighting against social, political and economic diversity by trying to advance one single model over all others. This is exactly what the Joe Biden administration is committed to doing by launching an ideological crusade against China, Russia and other nations that dare to deviate from the fundamentals of the Western development model. To make its case, the White House has announced a virtual Summit for Democracy to be hosted by the US on December 9–10 with the goal “to renew democracy at home and confront autocracies abroad.”
This vision reduces the multi-color palette of the modern world to a minimalist black and white graphics of a global fight between “democracies” and “autocracies.” It divides the international system into “us” and “them,” into “good” and “bad,” into “legitimate” and “illegitimate.” Such a reductionist system, if constructed, cannot be stable and shock-resistant by definition: Any major international crisis or a regional conflict could spark high risks of implosion.
It goes without saying that the nations of the world should firmly oppose corruption, abuses of power by state authorities and gross violations of human rights. If the goal of the Summit for Democracy were to confront these evils on a global scale, there would be no need to make the event exclusive by inviting mostly US friends and allies. If the goal is to advertise the US political, social and economic model, Washington should probably delay the summit and put its house in order first. If the goal is to isolate Beijing and Moscow in the world of politics, this is not likely to work well for the US.
Nations of the world have a right and even a duty to experiment with their political and social development paths. This experimenting contributes to the overall social experience of the humankind. Only history is in a position to judge what models turn out to be efficient, productive and fair and what models will find their place at the dump of human delusions. And history has a lot of means at its disposal to punish leaders, who believe that they possess a “one size fits all” model, which could successfully replace the existing diversity with an imposed universalism.
From our partner RIAC
The Chinese diplomatic force in the IAEA to confront Western leadership
At the level of international relations, through China’s presence in all the relevant international organizations, and its membership in all of the United Nations organizations, specifically in the International Atomic Energy Agency “IAEA”, China aims to play the role of the (international balancer), in light of its quest to maintain a certain level of competition with the United States of America politically and economically, this is in line with its desires to constantly play the role of the pole calling for (multipolarity and multilateral international pluralism through the Chinese political speeches of Chinese President “Xi Jinping”), in order to oppose American hegemony over the world and Washington’s policies to maintain its position as a single pole in the international community. China’s increase in its foreign investments, in order to enhance its economic hegemony over the world through its political and diplomatic tools with countries that have equal economic power with it in a number of (trade, scientific and technological issues, in addition to military and intelligence tools, as a reference for China’s new foreign political center).
We note that the patterns of Chinese foreign policy is (the pattern of dependence, which is based on the high level of foreign participation in all current global issues), to restrict the attempts of the United States of America to pass its decisions internationally, and therefore China is trying to enter the membership of all international organizations so that China’s foreign policies remain more comprehensive, broader and more effective in the global change, and to change all directions of these issues and control them in the United States, and this is one of its new political tools that serve its global expansion through the (Chinese Belt and Road Initiative).
In the same context, China focuses its external and competitive strength on its presence in effective international organizations, and rapprochement with the European Union, especially (France, Germany), despite not denying their relations with Washington, because of their strong influence in the global economy. In addition to China’s reliance on the plan of foreign and foreign investments in countries that influence American influence through the Belt and Road projects, as well as China’s resort to the import policy of many resources necessary to develop its economic capabilities from certain European countries to open influential relations with them, leading to (the Chinese strategy to obtain political support through the policies of alliances, consulates, representations, and its membership of international organizations), with the aim of influencing countries’ policies economically to pass important international decisions regarding the US challenge to China, such as: (the Iranian nuclear file, North Korea, Myanmar, Afghanistan, Syria, Venezuela, etc.), to increase with this The level of external penetration of China economically and politically).
China is mainly aiming to increase its membership in international organizations and the International Atomic Energy Agency, to (create a new balance of power and get rid of unipolarity restrictions through the medium powers and small states that the international system prevails with real pluralism, instead of the current state of American unipolarity).
In my personal opinion, the countries of the Middle East may find in the rise of China and Russia, and perhaps other international powers to re-compete the United States, as a (real opportunity to advance the effects of the pluralism of the international system at the regional level, and this would create more space for movement and opposition or bargaining and flexibility of movement for all to confront the policies of American hegemony, according to Chinese planning with Russia), and this also works to alleviate those restrictions and American dictates, and perhaps the sanctions and pressures it imposes on opponents of its approach internationally.
The strategy of competition between China and the United States has become China’s long-term strategy, which is based on (the necessity of a heavy Chinese presence in all international organizations and forums, which allows China to communicate with various global powers and balance its relations with them compared to Washington), as well as diversifying the People’s Republic of China for its relations and distribution of its power among the competing countries, which allows China to show wide options on all important issues, and the most dangerous is that this Chinese presence, which (allows Beijing to prejudice the foundations of its relationship with the United States of America and the other various powers around the world).
China and Russia also aim to form an alliance into all international and regional organizations to change the current provocative approach of the American policies in their confrontation, especially those related to mobilization policies and American alliances against them around the world. The Chinese alliance with Russia was so clear with the (Russian Foreign Minister “Sergey Lavrov’s visit” to Saudi Arabia, the UAE and Qatar, while on the other hand, both Kuwait and Qatar have received a member of the Political Bureau of the CPC Central Committee and Director of the Office of the Foreign Affairs Committee of the CPC Central Committee “Yang Jiechi”).
On the other hand, China is among the Security Council countries that have the largest number of (Chinese peacekeeping forces around the world), and China is at the forefront of the (most contributing countries to the international peacekeeping budget, in addition to sending naval fleets to carry out maritime guard missions according to according to the UN Security Council resolutions), and therefore China may play an important role in establishing security in many countries in the world, and this is perhaps what China plans to ensure its use, in the event of a decline in American interest in the security of many regions in the world, within the framework of (the strategy of pressure of the American expenditures, retreat and withdrawal from many places around the world and devote its concern to the American interior issues and its worsening economic crises).
The point is worthy to be considered here, is the report issued in July 2021 by the (International Atomic Energy Agency), entitled “Nuclear reactors around the world”, in which he analyzed China’s plan to (establish the dream of nuclear sovereignty around the world by starting to build and establish about 11 reactors). There are other Chinese nuclear reactors under construction, as well as the (new Chinese planning to build other 29 nuclear reactors), while the International Atomic Energy Agency’s work report on the other hand indicated that the known total number of reactors that are actually in service, other than those planned for construction, and other reactors under construction, is up to About 50 Chinese nuclear reactors, a step that confirms that “China is clearly shifting towards nuclear energy in the production of electricity, and depends on it directly in its industrial renaissance during the coming period, especially as it is the number one country in the world that is expanding in the establishment of nuclear plants, followed by Russia, which plans to build other 20 new nuclear reactors, while it has 38 nuclear reactors in active service”. Some leaks indicate the presence of Chinese nuclear reactors, exercises and tests in the “Doklam Desert” region on the borders of “Xinjiang” province in northwest China.
It also notes that, from the reality of the report issued by the International Atomic Energy Agency “IAEA”, its confirmation regarding (Chinese planning to become the first country in the world in the production of nuclear energy during the next ten years, in return for the decline in the share of the United States of America in nuclear reactors, which continues to the continuous decrease with the exit of new American numbers of reactors annually), as the future plan of the United States of America does not include the establishment of new reactors, which indicates that (the expansion of this type of energy tends towards China and Russia during the coming period, and these countries will have accumulated experiences, enabling them to dominate and control this new nuclear industry in various countries of the world, and this is what is actually common happening in the region). Knowing that its uses will be mainly peaceful and to serve the interests of peoples and countries, so we may witness the coming period intensifying the role of the International Atomic Energy Agency in many files around the world to study them, inspect different regions and various other areas to ensure (their peaceful uses of nuclear energy in many development projects around the world).
Hence, we almost understand (the importance of the Chinese presence and presence and its membership in the International Atomic Energy Agency in the first place), given that it actually owns 50 nuclear reactors in service, and its contribution to the production of electricity and providing energy to one and a half billion citizens, and China also has new nuclear reactors under construction, so (China seeks to be near the International Atomic Energy Agency, to embarrass, restrict and limit the American influence on the one hand against Beijing’s allies, led by Iran and then North Korea. Therefore, China has developed a strategic plan in the coming years, which is based on the intensity of the Chinese international presence and passing its foreign policies and decisions with the help of its Russian ally internationally).
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