In 2020-2021, it is expected to implement new economic projects in the Caspian sea and form a geo-economic strategy for the integration of the Caspian States.
Today, the multilevel system of cooperation needs an effective and modern mechanism of business and trade and economic cooperation. Its balanced and internationally recognized legal framework has already been established. The Convention on the legal status of the Caspian Sea is ratified now by all countries except Iran.
Azerbaijan has friendly relations with all Caspian countries and can act as a key link in the issue of integration. Baku demonstrates its readiness to connect the South with the North, and the East with the West, that will make the Caspian region as open as possible for economic cooperation with third countries.
There is a great potential for further development of the cooperation between Kazakhstan and Azerbaijan in the fields of transport and transit transportation, information and communication technologies, energy, industry and agriculture. Both countries are implementing large-scale infrastructure projects to benefit from location of two countries on shortest route passing through the East-West International Corridor. At the same time, joint efforts are implemented in order to widely apply multimodal transportation in the Caspian basin.
An important component of any economic projects in the region is to ensure the safety of their implementation. Among all the Caspian States, Russia is the only country that is able to achieve this by building a constructive dialogue with Tehran, as well as monitoring the implementation of treaty obligations by the Caspian five countries.
Currently, Russia is seeking to involve the coastal States in joint economic projects and to ensure investments of the Gulf States in the Caspian region.
On November 8, 2017, the Russian government approved the Strategy for the development of seaports of the Caspian Sea, road and rail trips to them until 2030. The strategy is aimed at creating a sustainable transport and logistics corridor, developing trade and tourism primarily with Iran, India and the Gulf States. It provides for the development of the Caspian ports of Astrakhan, Olya and Makhachkala and the construction of a deep-water port in Kaspiysk until 2025.
The Russian government is also promoting a new project to expand internal transit links between the Caspian and Black Seas – the Eurasia channel. Guided by security and economic motives, the project aims to compete with other East-West transport corridors, promote the development of economic relations between Russia and countries such as Kazakhstan, India, Iran, Pakistan, China and Vietnam, as well as strengthen the position of the Caspian countries in trade between China and the West.
There is a geopolitical struggle between the leading players in the world, and soon it is the Black sea and Caspian regions that can become the arena of struggle. the Caspian countries should understand as soon as possible that only taking into account each other’s national interests, they can come to the most optimal decisions on issues on which there are disagreements.
There are hotbeds of instability in the immediate vicinity of the Caspian Sea, so it is necessary to realize the responsibility of all Caspian States.
The Caspian region has always been the intersection point of the geopolitical and economic interests of many leading states, political and business circles, various ethnic and religious groups. And recently it has become one of the key regions of global politics. First of all, because of its natural resources. Together with the Gulf countries, it forms the so-called energy ellipse, in which about 70% of the world’s oil reserves and 40% of natural gas are concentrated. For the Caspian littoral countries this, of course, is a geostrategic advantage and one of the most important areas of cooperation.
But the modern economy is not only oil and gas production. Digital technologies, clean energy, environmental management, free movement of goods and services are the factors that make any country strong and competitive today.
The five Caspian states should not be left out of these trends. Not only the raw material component should determine the economic profile of states. In the 21st century the Caspian region should be associated with optimal transport infrastructure, high-tech and safe production, incentive measures for investors, unique tourism products.
Defeating Systemic Corruption? Anti-Corruption Measures in Post-Revolution Ukraine and Armenia
Ukraine and Armenia offer case studies on the challenges of recovering from post-Soviet authoritarian legacy, fraught with rampant corruption. As a matter of fact, systemic corruption has long condemned the two post-Soviet countries to a vicious circle of underdevelopment, bad governance and inability to implement fundamental economic and political reforms. Not surprisingly, the anti-corruption reforms have been put at the heart of post-revolution state-building in both countries.
Notably, Ukraine’s former President Petro Poroshenko’s government significantly reduced the corruption, particularly in the gas, banking, and government procurement sectors. As a sign of moving the fight against corruption to the highest possible policy agenda, the Ukrainian government introduced the National Anti-Corruption Bureau and the Specialized AntiCorruption Prosecutor’s Office NABU as well as Specialized Anti-Corruption Prosecutor’s Office (SAPO) established in 2015 with the participation of civil society and donor countries. Yet, the effectiveness of these institutions has been questioned by several observers, pointing to insufficiency of anti-corruption measures amidst unrelenting efforts by power groups to retain their outsized influence over law enforcement and justice. In essence, Poroshenko’s steady decline as a political powerhouse significantly owed to his failure to eradicate corruption.
Meanwhile, VolodymyrZelensky’s promises of defeating rampant corruption resonated with Ukrainians, who placed a great deal of faith in his ‘game-changing’ agenda.
The Rada’s first day was marked with the adoption of important pieces of anti-corruption legislation, including the removal immunity from prosecution for MPs and the proposal to provide the National Anti-Corruption Bureau of Ukraine (NABU) with the right to undertake autonomous surveillance.
Moreover, Zelensky’s anti-corruption efforts resulted in investigations and subsequent arrests of some of President Poroshenko’s associates, including Oleg Hladkovsky, a top Defense official; a People’s Front party MP and the former head of the Rada’s defense committee SerhiiPashinsky; ex-deputy minister for the occupied territories Yuri Hrymchak; and Poroshenko Bloc MP YaroslavDubnevych, etc. Furthermore, Zelensky put the High Anti-Corruption Court into action, that passed a bill reinstating criminal liability for the illicit enrichment of officials.
Similarly, the post-revolution government in Armenia criminalized illicit enrichment and intensified its anti-corruption campaigns. The government pushed for a series of high-profile trials against former senior officials, most notably ex-president Robert Kocharyan, former high-ranking officials Manvel Grigoryan, Aram Harutyunyan, Seyran Ohanyan and others. This extended to former defense minister and outstanding former ruling Republican Party member, Vigen Sargsyan, who was charged with “abuse of power,” as well as to former Chief of Police Alik Sargsyan – charged with covering up illegal post-election crackdown on opposition protesters in Yerevan in 2008 and with destroying evidence of the “overthrow of the constitutional order” led by then President Kocharyan. However, these arrests and investigations have not yet led to court rulings. Essentially, both Pashinyan’s and Zelensky’s fight against corruption has so far focused on punishing former governments’ members or associates. The question remains if the anti-corruption measures will move beyond selective prosecution of former officials to the unequivocal application of “zero tolerance for corruption” principle.
This, in turn comes down to the furtherance of democratic reforms , leading to the advancement of good governance practices and eradication of the systemic corruption in both countries.Some critics have been skeptical about the effectiveness of anti-corruption reforms in these countries, positing that while governments embark on “crowd-pleasing affairs,” much needs to be done to address the more systemic problems that the new governments inherited.
Both Zelensky and Pashinyan have placed a special emphasis on defeating judicial corruption. While former Ukrainian President Poroshenko hailed the judicial reform as “the mother of all reforms,” there was not much to reinforce government’s pledges of fundamental reforms.
In an effort to rectify this, in autumn 2019, President Zelensky embarked on judicial reforms. More specifically, he dismissed the High Qualification Council of Judges (the body responsible for attestation and selection of judges), announced plans to reload the Higher Council of Judges (the highest self-governance body of judges) and halved the number of Supreme Court judges. Remarkably, while the Venice Commission, an advisory body of the Council of Europe, praisedZelensky’s government’s judicial reform, it expressed concern over certain aspects of the reform, pertaining to “important issues of the rule of law” in Ukraine. The Commission criticised the situation, where the politicians are seen to get too much power to determine whether the sitting judges remain in their position or not. Similarly, the judicial corruption is one of the most harrowing challenges facing Pashinyan’s government. Following the controversial release of second President Robert Kocharyan in May 2019, Pashinyan contended that the judiciary is a remnant of the former corrupt system which would cook up conspiracies against the Armenian people. As a result, he called for a mandatory “vetting” of all judges to the all the courts in the country because of their ties to the previous regime. The tension between Pashinyan’s government and the “remnants” of the former regime reached a point, where the Armenian parliament adopted a bill on holding a referendum on suspending the powers of a majority members of the Constitutional Court. Pashinyan would largely treat the current Constitutional Court as an impediment to completing the revolution in Armenia. More specifically, it was regarded as an instrument that prevented the people from exercising their right to form a government in the country in the 1996, 1998, 2003, 2008, 2013 presidential elections. Notably, PACE co-rapporteurs for the monitoring of Armenia, called on Armenian political players to refrain from actions and statements that could be perceived as exerting pressure on the judiciary. Essentially, Pashinyan threw his weight behind changing the Constitutional Court, contending that the latter represents the corrupt regime of Serzh Sargsyan, rather than the people of Armenia. Furthermore, he regarded the opponents of the referendum as “anti-state” forces.
Overall, the judicial reform remains as big challenge in both countries, as its success is critical to breaking with the authoritarian legacies.
Based on the comparative analysis of anti-corruption strategies in developing countries, there are three main observations to make regarding Ukraine’s and Armenia’s trajectories.
First, in both countries corruption has been deeply entrenched and a result of the post-soviet authoritarian legacy. Essentially corruption has permeated every section of society and become a way of life in both countries . A major impediment to democratic state building, including fight against corruption in Armenia and Ukraine is related to prevailing post-Soviet “informality”. The use of informal networks and connections in exchanges of favours, gift-giving along with other informal activities have been been deeply ingrained in both Ukrainian and Armenian societies. Therefore, the state apparatus, as well as education, healthcare, judiciary and law enforcement have long been dominated by informality.Thus, quite often the institutions that have been set up to fight corruption run up against deeply entrenched habits of graft in society and politics. Even though it would be an oversimplification to contend that Armenian and Ukrainian societies are congenitally hooked on graft as a way of life, the “culture of corruption” will not disappear overnight. Studies show that Ukrainian citizens tend to “condemn” high-level corruption” yet “regard petty corruption as a justifiable evil”. As a matter of fact, countries with long histories of informal illiberal practices and corruption often face tremendous challenges in eradicating these blights .Therefore eradicating the culture of corruption and informality should be an urgent priority on the reform agendas of new Ukrainian and Armenian governments.
Second, one of the biggest challenges of anti-corruption reforms in developing and particularly transitional countries is the persistence and prevalence of corrupt practices by political and economic elites. More specifically, the residual influence of oligarchy presents a threats to the fight against systemiccorruption. Clearly, the political elite’s robust commitment to eradicating systemic corruption is indispensable. Meanwhile, inconsistencies and the weakness of a commitment lead to a situation, under the banner of “zero tolerance for corruption” governments keep playing a “tolerant corruption” game. Although political will may not be sufficient, it is a necessary condition to defeat corruption. The case of Romania demonstrates that the political will to defeat corruption may well make up the absence of a tradition of the rule of law and democracy. More specifically, the European Union pressure, along with the electoral pressure and the political will of the domestic political elite combined to ensure the establishment of the rule of law and defeating corruption in the Romanian judiciary .
Third, external factors including the anti-corruption programs of international donors have proved conducive to the fight against corruption. While Ukraine’s choice for Europe and fervent desire to irreversibly depart from the orbit of the Russian influence is a crucial impetus to defeat corruption, Armenia’s centrality in the Russia-led socio-political order has remained intact. Nevertheless, Pashinyan’s government’s anti-corruption efforts prompt to posit that international efforts may well resonate with prevalent social norms in Armenia. A question remains if the legitimacy of the anti-corruption norms promoted particularly by the European Union will lead to their smooth implementations in Ukraine and Armenia.
Last but not least, the lessons from the successful anticorruption crusades of Singapore and Hong Kong show the need for anticorruption reform initiatives to be participatory and inclusive of all stakeholders including public and private sectors as well as civil society. Thus, it is absolutely essential for Armenian and Ukrainian civil society organizations to further develop institutional and professional capacity to contribute to anti-corruption reforms and influence their implementation.
Overall, the grounds for cautious optimism need to get reinforced to ensure that systemic corruption will no longer undermine democratic state-building in both countries.
The EU Introduces New Vision for Eastern Partnership States
The EU has published an Eastern Partnership (EaP) policy which outlines the Union approach for 2020 and beyond towards the six former Soviet states bordering Russia. This comes amid fears that the EU has not been able to fully implement its previous Eastern Partnership policy as Georgia and Ukraine, the states which most successfully implemented the reforms, have not become EU members.
The new policy document is therefore an important step, serving as a continuation of the EU’s resolve to further integrate the 6 former Soviet states into the Union’s institutions.
The new policy document is a result of consultations launched in 2019 by the European Commission. The previous document made an emphasis on engaging with civil society to ensure effective reforms. There also was a focus on increased public accountability, advanced human rights and local development.
The new policy document outlines changes in 3 out of 4 priority areas. The EU again will work on building stronger economy, connectivity and stronger society as a guarantee.
In the new policy, bilateral cooperation will remain the main way to ensure the implementation of policy recommendations. According to the document, “the EU will continue to provide support in bilateral, regional and multi-country fora, including targeted sectoral assistance in line with the principles of inclusiveness and differentiation. In addition, the EaP will continue to be flexible and inclusive, allowing countries to tackle common and global challenges jointly in a wide range of areas, fostering regional integration”.
Overall, there are the following long-term Eastern Partnership policy objectives the EU plans to implement beyond 2020: building resilient, sustainable and integrated economies, accountable institutions; increasing the rule of law and general security; making progress in building environmental and climate resilience; implementing a resilient digital transformation; building a fair and inclusive societies.
There are also purely geopolitical clauses. For example, “the EU and the partner countries will invest in physical connectivity and infrastructure (in transport, energy and digital) as underpinning conditions for economic development”.
The new document also underlines the importance of increasing bilateral trade which builds upon the previous progress. For example, in the 2010s, EU-EaP trade has nearly doubled, turning the partner countries into the EU’s 10th largest trading partner.
This has the geopolitical ramification of Russia gradually losing the economic battle as the EaP states diversify their economies. The EU is the first trading partner for four partner countries (Azerbaijan, Georgia, Moldova and Ukraine), while for Armenia and Belarus the EU is the second biggest trading partner.
The diversification in exports of goods of EaP states helps to better integrate those states into the global value chains. Another sign of closer interaction between the EU and EaP states is the number of companies trading with the Union. In Georgia, the number increased by 46%, from Moldova by 48% and from Ukraine by 24%.
Building upon this achievement, the new document calls for deepening of “the economic integration with and among the partner countries, particularly that of the three associated countries through continued support for the full implementation of the current DCFTAs”.
Another geopolitical realm covered by the new document is transport. The EU will be focusing on upgrading key physical infrastructure in road, rail, port, inland waterway and airport facilities, and logistics centers, in order to further strengthen connectivity between the EU and the partner countries and among the partner countries themselves. This is in connection with the energy connectivity in the South Caucasus, as the Southern Gas Corridor is nearing completion with first gas from Azerbaijan likely reaching the EU in 2020.
Yet another important sphere of cooperation will be strengthening the EU’s cooperation with the partner countries to create a strong financial system for sustainable economic growth.
Within the measures to minimize organized crime, the EU will continue its support for the EaP states to cooperate with EU justice and home affairs agencies to fight human trafficking and trafficking of illicit goods (notably drugs and firearms), etc.
Among other policies the EU’s support for the cyber resilience of the partner countries stands out. This is particularly important for Georgia as the country was recently subject to massive external cyber attacks.
Author’s note: First published in Georgia Today
India’s Growing Engagement with the South Caucasus
Throughout decades the South Caucasus has played a relatively minor role in India’s foreign policy. However, over the past several years there have been economic and political trends indicating India’s growing interests in the South Caucasus’ economic and infrastructural potential as well as a gradual emergence of New Delhi’s strategy towards the region.
Since the break-up of the Soviet Union the newly independent Georgia, Armenia and Azerbaijan, which constitute the South Caucasus region, began to attract large Eurasian and non-Eurasian states’ attention. Influential players so far have been the US, Russia, European Union (EU), Turkey, to a lesser degree Iran and a latecomer – China. India, however, which is one of the biggest and fast-growing economic markets in the world (seventh country in the world by nominal GDP; third country by GDP PPP; second-largest country by population) and has growing geopolitical ambitions spreading all along its vast land and maritime borders, has been notably absent from the South Caucasus’ geopolitical chessboard.
New Delhi has differing approaches to each of the region’s country, driven both by pure economic and political realism as well as economic preferences. What is common though is that despite the absence of common strategy towards the region, trends of cooperation between India and each of South Caucasus states are on the rise.
There is a big potential for economic cooperation. So far, Georgia-India trade is of limited range, where Indian exports to Georgia are mainly meat and frozen meat, cereals (rice), electrical machinery as well as pharmaceuticals. Georgia, on the other hand, exports to India chemical (nitrogenous) fertilizers and metal (aluminum and zinc). As seen, the bilateral trade is limited and belongs to the secondary class of export. Both states have much larger potential to tap into. Georgia could increase its export of ores, metallurgical products, medical products, wine and other alcoholic and non-alcoholic beverages and processed agricultural products to the Indian market.
India, on the other hand could initiate its exports of cement, mineral fuels and plastic products to Georgia. There is also an untapped potential of India providing some advanced software engineering and IT solutions to the Georgian market.
Much can be done in yet another untapped sphere – tourism. Though the number of Indian tourists visiting Georgia has been on the rise, in recent years there were multiple of cases of barring Indian citizens from entering the country. Thus throughout 2019 more than 4200 Indian citizens were denied entry into the country.
Moreover, the improvement of economic and tourist cooperation between the two states is also complicated by the fact that even today India does not have its own embassy in Georgia. It is the Indian embassy in Yerevan, which still oversees all Indian diplomatic affairs in Georgia.
Nevertheless, lately there have been important trends in the bilateral relations indicating upcoming improvements in the state of affairs. Recently Tbilisi and New Delhi launched free trade talks based on completed a joint feasibility study of a free trade agreement. The latter confirmed that a freed trade agreement will have a positive impact on bilateral trade.
Moreover, recently Georgia and India signed an Air Services Agreement (ASA) with the purpose of running non-stop flights with the low-cost airline IndiGo (InterGlobe Aviation Limited). The initiation of flights was planned for March 2020.
There also is work being done to remove a major obstacle in bilateral relations: opening of Indian Embassy in Georgia. The Georgian side has already notified India’s Ministry of External Affairs. This follows, albeit lately, the relations both states enjoyed from 1990s when India had recognized Georgia’s independence on December 26, 1991, following the collapse of the Soviet Union and had established formal diplomatic relations on September 28, 1992. Other efforts included the Georgian government’s decision to set up an honorary consulate in Delhi in 2005, which was then upgraded to a full-fledged embassy in 2009.
Armenia’s relations with India are also experiencing interesting twists. For the past many years, beyond Russia’s geopolitical importance, China’s rise has been a subject of debates within the Armenian analytical community. Here too India has been largely absent. This is more surprising as India traditionally has good relations with Armenia’s key strategic ally Russia. Moreover, Moscow and New Delhi are members of both Shanghai Cooperation Organization (SCO) and BRICS. This could mean that Moscow would not be too worried by New Delhi establishing itself deeper in the Armenian economy.
Besides, there is also geopolitical thinking which could unite both states. Strategically Armenia is interested in deeper cooperation with India as Azerbaijan and Pakistan form an increasingly close partnership. Yerevan is in conflict with Baku over Nagorno-Karabakh, while Islamabad is the only state in the world which does not recognize Armenia’s independence and therefore fosters close contacts with Azerbaijan.
This broader geopolitical setting explains Armenia’s efforts to foster closer military, technological and generally diplomatic relations with India. For example, in 2017 an Indian delegation headed by Vice President Mohammad Hamid Ansari visited Yerevan where for the first time in 25 years Indians actively discussed the Nagorno-Karabakh conflict.
These overlapping interests of New Delhi and Yerevan could be behind recent decision by the Armenian government to grant India a $40 million deal to supply four India-produced weapon locating radars (‘SWATHI’, which can handle multiple projectiles fired from different weapons at different locations) to Armenia. In this tender Indians has reportedly outbid Russia and Poland. According to the ANI news agency which based its reporting on Indian government sources, “the deal is for supplying four SWATHI weapon locating radars developed by the Defense Research and Development Organization (DRDO) and manufactured by the Bharat Electronics Limited.”
Beyond geopolitics, there is a growing people-to-people contacts between India and Armenia. The latter has become Indians’ one of the favorite destinations for education and employment. Considering Armenia’s small size, the number of Indian citizens that were allowed to reside in the country is substantial. In 2016, 1119 Indian nationals received residency in Armenia, in 2017, 1086 received residency and in 2018, residency status was given to 938 Indian nationals. Throughout most of 2019 the number went downwards with more Indians leaving Armenia than arriving, but as many expect the country will remain an attractive destination for the Indians.
India’s relations with Azerbaijan are mainly driven by political realism. Though Azerbaijan is close to Pakistan, India’s geopolitical rival, in the recent years New Delhi worked hard to tap into Azerbaijan’s advantageous geographic and economic position.
This is well reflected in the bilateral trade which grew from around US$ 50 million in 2005 to approximately US$ 922 million in 2018. In 2019 the trade turnover constituted some $1.1 billion. Moreover, by 2020, there are over 200 Indian companies operating in Azerbaijan with over US $ 1.2 billion investments, which is much larger than in Georgia or Armenia.
India exports rice, mobile phones, heat exchange units, air and gas compressors/ ventilation units, drugs/human vaccine, cables, plaited cords from ferrous metals without electric isolation, small machines, black tea, insecticide etc to Azerbaijan. Azerbaijan’s export to India, on the other hand, mainly consists of crude oil. Overall, as in the case with Georgia, the bilateral trade is mainly based on products of secondary importance. A much bigger untapped potential exists where India could become Azerbaijan’s major importer of high technologies.
Another potential sphere is military cooperation. Though Azerbaijan purchases most of its weapons from Russia, Baku is nevertheless interested in diversifying its options. India, with its nascent growing capabilities to create military technologies for export across the globe, could become Azerbaijan’s close partner.
There is also an issue of the geopolitics which drives India’s approach to Azerbaijan. The latter strategic location as a starting point in the South Caucasus energy corridor makes the country attractive to India. It is no wonder that a quick growth in bilateral trade between the two states took place when the opening of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and Baku-Tbilisi-Kars railway materialized. As a result, Indian oil companies have been buying substantive quantities of crude oil from this corridor.
India is also interested in Azerbaijan’s location as the latter lies in the center of the International North-South Transport Corridor (NSTC) which stretched from the Indian territory (through Azerbaijan) to Russia’s Baltic ports. Though the route has yet to show its full potential, ships and railroads to be used along the NSTC would allow India to connect to the European market.
Thus, all South Caucasus states are set to gain exponentially in the economic and in some cases military realms from establishing deeper cooperation with India. There is a clear trend showing that after the end of the Soviet Union, the South Caucasus has never really been a part of India’s active foreign policy, this began to change in the recent past. New Delhi still lacks an overall geopolitical approach (i.e. strategy) towards the South Caucasus and builds its bilateral relations on an ad hoc basis, but the country grows increasingly perceptive of the region’s growing infrastructure which connects the Caspian and Black seas and would allow India to connect to the European market.
Author’s note: first published in Caucasus Watch
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